- Bitcoin has repeatedly defied traditional pricing models, including Stock-to-Flow and the Rainbow Chart
- Michael Saylor’s “All your models are destroyed” statement gains renewed attention as Bitcoin approaches $100,000
- Early adoption theories predicted universal Bitcoin usage by now, which hasn’t materialized
- The Bitcoin Power Law model lost credibility after its creator endorsed alternative cryptocurrencies
- Market shocks from 2022, including FTX‘s collapse, proved most pricing models inadequate
Bitcoin Price Models Face Reality Check as $100K Approaches
As Bitcoin nears its all-time high and edges toward $100,000, Michael Saylor’s famous declaration about destroyed models resurfaces in cryptocurrency discussions.
The MicroStrategy CEO’s statement originated from a debate with Hedgeye CEO Keith McCullough, where Saylor illustrated how sudden large-scale purchases could disrupt technical analysis.
Early Predictions Miss the Mark
The Speculative Bitcoin Adoption Price Theory, an early forecast model, predicted Bitcoin would reach $2,500 by November 2013 and achieve near-universal adoption.
This prediction proved inaccurate, as Bitcoin failed to reach even $1,200 that month.
A decade later, most people globally still haven’t used or owned Bitcoin.
Stock-to-Flow Model Limitations
The Stock-to-Flow model, which compares existing supply to new annual supply, gained prominence through analyst Plan B’s predictions.
Plan B forecasted Bitcoin would hit $100,000 multiple times between 2021 and 2023.
These predictions failed to materialize, exposing the model’s auto-correlative nature rather than true predictive capabilities.
Power Law’s Rise and Fall
The Bitcoin Power Law generated significant debate within the Bitcoin community earlier this year.
Creator Giovanni Santostasi later admitted the model was descriptive rather than predictive.
His subsequent endorsement of alternative cryptocurrencies led to a fall from grace, with former supporters like Fred Krueger publicly distancing themselves.
Rainbow Chart’s Evolution
The Bitcoin Rainbow Chart, introduced in 2014, uses color bands to indicate price ranges.
Eric Wall’s promotion of the chart as a semi-serious tool helped revive its popularity in 2020.
The 2022 bear market forced the chart below its lowest predictions, leading supporters to add new color bands to maintain its relevance.
Market Shocks Challenge Models
The collapse of major crypto entities in 2022, including Terra/Luna, Three Arrows Capital, and FTX, demonstrated the limitations of predictive models.
While thousands of pricing models exist on platforms like TradingView, Bitcoin’s price movements continue to challenge conventional analysis methods.
The cryptocurrency’s resistance to traditional modeling approaches highlights its unique market behavior and the challenges in predicting its future value.
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