Bitcoin BTC/USD bulls hoping for a seven-figure price by 2028 may be disappointed, according to a new report by 10x Research.
What Happened: The report, authored by Markus Thielen, questions the validity of the Stock-to-Flow (STF) model in predicting future Bitcoin prices.
“The STF model predicted a price of $110,793 for Bitcoin in the last cycle, which clearly didn’t happen,” Thielen states in the report. “This casts doubt on its ability to accurately forecast future prices, particularly the ambitious $1.3 million projection for the current cycle.”
STF Model Under Scrutiny
The STF model, often used by Bitcoin proponents, compares the current supply of an asset to its annual production rate.
A higher ratio suggests greater scarcity, leading to a higher price.
However, Thielen argues that the model doesn’t account for human behavior and changing market dynamics.
“The model assumes that higher prices will not incentivize increased production,” Thielen explains. “While this might hold true for gold, Bitcoin mining can be readily adjusted based on profitability.”
Diminishing Returns And Cycle Analysis
The report also highlights a potential weakening in Bitcoin’s historical cycle pattern.
10x Research observed a diminishing upside projection in each cycle, suggesting a potential limit to future growth.
“The low to high from the 2011 to 2013 cycle was a staggering 560x,” Thielen notes.
“Following a pattern of dividing each cycle by roughly 5, our analysis projected a high of $70,000 for the current cycle, which aligns well with what we’ve seen so far.”
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Focus on Trading The Cycles
While questioning the $1.3 million target, 10x Research emphasizes the importance of understanding cyclical trends.
“Bitcoin has historically experienced significant price drops between bull cycles,” Thielen states. “Investors should consider trading these cycles rather than simply holding (HODLing) their assets.”
The Road Ahead: Consolidation And Potential Rally
The report predicts a potential consolidation period for Bitcoin in the near future, with prices settling around $52,000-$55,000.
However, they see an opportunity for a rally later in the year.
“Market excitement surrounding a potential Trump win in the upcoming US election could drive Bitcoin back to $70,000 or higher,” Thielen suggests. “A volatile market environment presents the best opportunity for investors to leverage our insights.”
Looking Ahead: Benzinga’s Future Of Digital Assets
The future of Bitcoin price predictions and market behavior will undoubtedly be a hot topic at upcoming industry events.
Benzinga’s Future of Digital Assets conference, happening on Nov. 19, is one such platform where leading analysts and investors will gather to discuss the latest trends and strategies.
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