welcome to plan B on YouTube. In this video, I will share my view on the Bitcoin Market based on seven charts. Now, because there's a lot of new viewers that are not on X, not on Twitter, I will explain it a little bit more than usual in this video. So, first, we're going to talk about two charts: the stock-to-flow chart and the market cycles chart that are my favorite. So, those are my key charts. Then, we're going to talk about two charts that are very well known and frequently used in technical analysis: those are the RSI and the moving average charts. And then, we're going to talk about three charts that are based on on-chain data, and that's very unique to crypto, to Bitcoin. You don't have that in stocks or bonds: on-chain data with all the transactions. So, three charts based on that. And for today, I have something special, a bonus chart at the end. It's a new chart. It provides some very valuable insights, I think. So, start with the first chart: stock to flow.

and I'll forget everything you know about stock to flow. Just look at the chart and see what it tells you. On the x-axis, there's the date from 2010 to today 2024. On the y-axis, there's the price of Bitcoin. And note it's on a logarithmic scale. So for example, this is 100, but this is 200, 300, 400, 500, 600. The lines get closer and closer, and all these steps are a factor of 10. 10 * 100 is 1,000, 10,000, 100,000, a million. And why do we use the log axis and the log scale? Because we can see long-term trends way better. We can see what we're interested in as investors - in returns. So in this 10x every cycle, for example, and not in the actual level. That's not important. It's about the returns. So this gives us a very nice view of the returns. And if you don't do it, you'll see that

everything before let's say 2017 becomes a flatline here on the bottom and then it seems like all the action is in the end of the time series which is not true as you can see from here anyway so price is here and then there's a third dimension. It's the colar and color here is months until the next halfing so it's just a timer um from well 48 or a little less than 48 months four years until the next half thing and it counts down until zero the month of the the and that's blue so we go from red to blue from red to blue why do we do it because it gives uh some situational awareness for example um the green which is 15 months until the next halfing usually that's a bare Market 15 months before a halfing is usually a bare Market but you can easily see where that 15 months is so you can compare from cycle to cycle within the time series because of that third dimension um so uh yeah there's three lines in the

in the chart, there is a price chart that's the colored dots with this uh color overlay over it. Then there's the model in the Gray Line, and there's the error of the model that's basically the difference between the model and the actual price, um yeah. So the stock-to-flow model is basically just a fit through the data points, and normally you would see a straight line fit, which would be uh log-linear straight line model. Then I didn't use that. You also see this very nice smooth, uh curved lines, which on L L would be a straight line, which is a power law, for example, those are also nice, but my eye caught something different, and that's why I used this step function here. I noticed that all the increase in the Bitcoin price is basically after a halving. So um when blue turns to Red, that's when you see the jump in price, blue to Red jump in price, and then it levels off here, the same thing buff, and then it levels off, um. So I modeled the stock-to-flow ratio.

which doubles every halfing, every four years. So, the first halfing was here in 2012. That was an official halfing. The second one was in 2016. We had one in 2020, and recently this year in 2024, there's one unofficial halfing. It's not a real halfing. In that, the block reward changed, but the stock-to-flow ratio changed very rapidly in these first couple of years, which were crucial to the existence of Bitcoin. And this is where the stock-to-flow ratio flipped from or doubled actually from two to four, and then from four to eight in this real halfing. But it actually had an unofficial halfing in 2010, 2011. So, that's basically what it says. Then, there are a lot of questions about that. Basically, I wanted to put all the information in one sheet without using too much, too much axis. So, one, I wanted to use this axis. One is when the model is exactly right and the same as the model price. So, for example, this period here, this bear Market in 2015 was

exactly on this gray model line, and then the error here is one Bitcoin is above the model line. It goes above the one. So, this would mean it's two times above the model, three times, four times above the model. And the same if you look at if the Bitcoin price is below the model value, it's below one. The error, and for example here, um, and then I cross to the model line here, then it's one again. So, that's the error and, uh, so there's a lot of misunderstandings, by the way, about the stock-to-flow model. I wanted to talk about some of it, some of them. One misunderstanding is that this model failed because it didn't reach 100,000 here in 2021. And, um, well, I'm a little bit to blame for that myself because I have tweeted once that, well, if Bitcoin doesn't reach 100,000, then the model failed, which was actually not true if you think.

uh think about it. It's more what I meant with that, and I'll explain it with the error. Here, you see that sometimes the Bitcoin price is around the model line, exactly around it like in the beginning. Sometimes the price is above the model line like in this period and in this period. So, my expectation for the last period, the 2021 or the 2020 to 2024 period, was that we, the Bitcoin, would reach the model price, which it did actually, right? It reached this 50,000 multiple times, but normally it has been below the model. Of course, in the beginning just after the halving and later in the bear Market, but I really did expect, and I would expect again if we were in 2020, that Bitcoin would overshoot the model line also, and it would overshoot it by a factor two, which we have seen in almost every previous, in all previous periods actually. So, it's not a weird thing to expect that Bitcoin reaches

reached the 100,000 last cycle, but it didn't. In fact, it spent most of its time below the model line, which was a first, but not weird. Now most people, because of recency Biers too, most people think that this cycle will be below the model line again, and that's very understandable. However, it's, there's as much chance that the model will be above the model line again, and like this period or this period. In that case, I mean the model line for Next Period is 500,000, right? That's about the level that we expect, and then normally we would go 2X over that or an n2x below that. So that's 1 million or 250k. So that would be the normal range around this model line. And by the way, that's another misunderstanding that these ranges are so huge. Like here, for example, last period it was the model

prediction was 50,000, and then the range was 2x that, 100,000, and uh divided by to 25. So, everything from 25,000 to 100,000 was okay, and that's a pretty large uh and wide wide range. But on the other hand, Bitcoin has a volatility that is very large. It has a volatility, implied volatility, volatility of 80%, sometimes 100% in the option prices. So, you cannot expect a a model which is a simplification of reality, uh, and especially a very simple model like the stock-to-flow model, which only has one input parameter. You can't expect that to be very precise on an asset that has an implied volatility of 80%. So, in fact, these ranges, well, everybody should decide for himself if that's useful or not. For me, uh, having made this model at around 3,000, 4,000, predicting that it would go to 25 to 100,000 was very useful. And right now, we're at 60 something thousand.

predicting that Bitcoin will go to $250,000 to a million wide range, but very useful for me. Everybody has to make that decision for himself. Now, one more misunderstanding is that I changed this model a lot, this formula. That's not true, and I understand why people think that, and I think it is because there's a lot of implementations of this stock-to-flow model. I mean fidelity has an implementation, Glass Noe has an implementation, Looking into Bitcoin has an implementation, Hamal I think there's about 20 or 30 implementations of the stock-to-flow model that are frequently used, and they're not mine. So they all are slightly different, and they give slightly different values. Some update every day, some update not at all, but anyway, there's a lot of different models. They're not all mine, actually none of them are mine. Only this one is mine. But people think they're mine and that I change them all the time, which is not too true.

however, there are two model variants that I made myself, and there's some confusion about that as well. So, there is one 100K model. So, if that's a model that has this straight line, the model line for last period at 100,000, and I use that a lot on Twitter. But that model was specifically made for the discussion that we had in 2019 about well, we only had two halvings before. Your model is based on the hings and two hings is not enough uh to extrapolate into the future, to make to generalize on that pattern, which is a fair argument. But to counter that argument, I made a model with only four data points before the first halving in 2012. So, I that was November 2012, by the way. So, I got four data points, October 2012, 2011, 2010, and 2009, October month close prices of those four years before any halving had taken place. From that, from those four model Point uh data points, I fitted a model, and that was the

100K model. So even before any halving had taken place, you could actually predict quite nicely where bitcoin price would be. Yeah, after each halving, and that was an extreme out-of-sample model, which I really liked, and I tweeted a lot about it on X. Uh, so you, a lot of people refer to that 100K model, but it's not the base model. The article that I wrote in 2019 right here in the green is still the same formula that I use today. And, uh, and there's a second variant. It's the stock-to-flow X cross-asset model. I wrote an article about that as well. I think it was in 2020. Uh, and that was another extreme model where we fitted um on gold and silver and platinum and pum data, diamonds data, real estate data, so other assets, hence the name stock-flow cross-asset model. Uh, so, so, so even if you didn't know, if you don't know the history of Bitcoin, the time series from other

assets from other commodities like gold and silver in real estate that also have a stock-to-flow ratio. By the way, you can estimate what Bitcoin is worth, and at the time, that was $288,000. And it's not about the exact numbers; it was only to show that Bitcoin was severely undervalued at 3 or 4,000 or even 10,000 when this article was written. So two variants: the 100,000 variant based on four data points before 2012 and the 288,000 based on gold and silver. But those were for specific arguments at the time, and sometimes they're used still in 2024 but out of context, which is understandable because there's a lot of new people that missed this entire discussion. For now, I still use the same model; the formula hasn't changed. The outcomes haven't changed. This is still 50,000; this is still 500,000, and this is still 4 million. So okay, this is the

first chart uh right now we closed, by the way, at $64,000 uh in J in July, and it's the fifth month in this 60k 70k range. There is no direction whatsoever despite the ETFs, despite the German government selling 50,000 coins, despite Mt. Gox that redistributed all the deceased coins, and despite Trump embracing Bitcoin and and want to make a strategic Reserve with Bitcoin in the US. Nothing happened to the price whatsoever, so we're still waiting for directions. Let's go to the second chart. Second chart is the Bitcoin Market Cycles chart, and back in 2019, that's right here when I made the stock-to-flow model. I basically only had the stock-to-flow model um and and only since 2022, it's uh coincidentally also in the bear Market in this this green zone that I made that model um but only since that time, I also have this Market Cycles model and uh this Market Cycles model gives me a little bit more information than than than stock-to-flow.

than just Bitcoin pumps one order of magnitude after halvings. That's basically what the stock-to-flow says. But right now, we know where we are exactly in the market cycle, which is a bull market. And well, although I never shared the formula of this model because frankly it's too valuable for me, I do share the results. And that's also valuable, I think. So although you don't have the formula, interpret this as my view on the markets, my subjective view on the markets. But please note, it's very objective. It's based on on-chain data and it's a hard calculation, yes or no, in a specific cycle. Now, very different from the stock-to-flow that can predict in the future. So $500,000 average Bitcoin price for this halving cycle and $4 million the halving cycle after that. The Bitcoin Market Cycles model cannot see into the future. It can only detect in which phase it is right now. So, you that yeah, Bitcoin is

in this red in in in the bull market at present and and it's at the start of a bull market because we haven't seen any movement yet um now I don't know when it flips to Yellow but as soon as we get there I'll let you know now note one more thing the bare markets the green are very clean the accumulation pH blue those are all very clean red and yellow is a bit messy for example 2013 that's the double Peak uh bull market it's flipped to yellow and then it flip back to red and ideally you would you would yeah have this this dots not not yellow but still red and and but but but it wasn't so of course you go maybe you you sell your coins here and you buy them back here and you make some loss but that that would have turned okay in 2013 and you see the same in 2021 which we all remember very well uh and when the stock to flow of course didn't hit that 100,000 uh we were all

bit like hey what what what's happening where is this bull market do we only get a 6X what what's what's happening now we see it the the the Cycles flip to distribution to yellow and then flip back to bull market again to flip immediately back to to distribution so so these two are a bit off it's like this was the real all-time high and this is just off now maybe I can fine-tune these these quirks in the in this model but maybe uh maybe I can't or or I want to keep the model as simple as possible as clean as possible so for now it's still in there and that will be very interesting when in in in six or 12 months time I don't know we we'll encounter that that yellow dot whether that's a fake uh end of the bull market or a real end of the bull market sign uh but I'll uh as said I'll I'll let you know and I use this this model a lot as one of the two main models now let's go

to the two technical analysis models and uh it's always good to have multiple models multiple perspectives. I think not only in investing but with everything and it's also good to look at some old school technical analysis. So in this case, we look at relative strength index RSI which is a momentum indicator. Everything higher than 50 is an uptrend lower than 50 is a downtrend and normal uh RSI range would be between 30 and 70. So for example, if you if you measure RSI on stocks or bonds or whatever, it's between 30 and 70. So you can easily see that a traditional investor um would make that mistake for Bitcoin. It it it looks at the RSI it's c65 it said whoa that's high it's it's probably going down. But if we look at a historical chart of the RSI like this chart, we'll see that uh the range the normal range is between 40 and let's say 90 not between 30 and 70. It's it's a lot higher.

for Bitcoin, which is understandable because Bitcoin has been in an uptrend for its entire life. Um, maybe that will normalize over time, but for now, it's fairly high. The RSI and uh, but still, it's very useful because in this chart, for example, what, well, what does it tell you? You can see the bull markets, the bear markets. It's like the tides in the ocean. It's greed and fear and greed, and it goes on and on. It's many emotions that you see and uh, and that will not change ever. Uh, so I think it's still very useful to look at these RSI charts and uh. RSI is 66 now, almost unchanged from 65 last month. That's consistent with the market cycles, right? The bull market, it's above 50, it's in an uptrend, and it's consistent with stock-to-flow charts, which says Bitcoin is undervalued. And in my opinion, we just started this greed phase, this bull market phase, and RSI will increase.

from here to let's say above 80 possibly 90. 90 again and uh that would be like uh 2013, 2017, and 2021. Um so that's that's what I think. Second technical analysis chart is a moving average. Moving averages are very useful to smooth out short-term random noise in the price data and to focus on long-term trends. Now we're looking here at a 200-week moving average, so that's almost 4 years, which is really long term, and I like it because it aligns with the four-year halving cycles. I also like it because it always goes up, the 200-week moving average, the black line always goes up, it never, it has never ever gone down. So um notice that this 200-week moving average was a support line in the 2004 and 2015 bear market. It bounced from the week moving average up into the next bull market. Then it was support again in 2018-19 bear market and and in the 2022 bear market it crossed for the first time the 200-week moving average.

so this was if we look at 200 we moving average. The worst bear Market ever that we have seen in Bitcoin. And then we also see that this moving average, this support, this historical support turned into resistance. And luckily we broke that resistance and we crossed the 200 we moving average again. And we're now at what are we $38,000. And it's rising, this black line is rising every month at about or a little more than $1,000. Uh, now Bitcoin is well above that 200 we moving average as always just after a halving. Uh, waiting for this bull market to happen, um, very interesting, very useful indicator in my opinion. Now let's go to the on-chain indicators. There's three that I use a lot. And one is realized price. Is very unique data for Bitcoin because only in Bitcoin and some other crypto we do have all the transactions rightly available. And uh, we can make analysis on it. So please note that I calculate all the on-chain data myself with data from my Bitcoin node.

uh most people most on-chain analysts they use third-party data like the data from Glassnode but I really want to do it myself because I've seen a lot of mistakes and I want to check check and double-check all that data because I do have uh Investments based on it so this my own data of course I can make mistakes as well um real-life price is by the way comparable to the moving average that we just talked about it's it's it's a weighted moving average if you will so what it does is all the 19 million Bitcoins and fractions of Bitcoins all the fractions that are out there all the 19 Bitcoin 19 million Bitcoins out there are weighted against their their last the the last price that they transacted against so the very old coins that transacted in 2013 for example are weighted with a price of 100 but most coins are more recent so they're uh weighted in this realized price with a price of 20,000 30,000 for

40,000, etc. etc. So then we get if we wait all those uh Bitcoins that are out there, we get a price of 302,000 for the realized price. That's a black line, and it includes all the Bitcoins out there. If we only include the last two years, so the two-year realized price, uh, of course, we miss all the older prices, so all the low prices, and so that value is higher. Um, so the two-year realized price is 50,000 right now. It's a dark blue line, 50,000. If we make that period even smaller, like five months, we only look at the last five months. What is the realized price there? Uh, it's a, um, it's, uh, what is it, 666,000, and Bitcoin is slightly below that, of course, right now at 64, but it's well in the global general scheme of things. It's at this, this, uh, five-month realized price. Now, what's very interesting, two things, it's, uh, and, and, and please don't look at the exact numb

so for example that Bitcoin is 64 and 2,000 below the 66 um uh five months Rel life price. That's not really important. What's really important is that in bare markets, this short-term moving average, short-term realized price goes below the two years realiz price and below the um entire realiz price. Same happened here in the bare Market, same happened here in the bare markets, same happened here. So uh and the other way around too if if the bare Market's over and this short-term realize price crosses the two-year real life price and the real life price, the bull market starts. It happened here, it happened in 20123 last year. So we're now at the beginning of bull market, uh the other interesting thing is that the short-term real life price acts as a support line in bull market. So we have dips in bullk markets, a usual bull market can have minus 20%, minus 30% dips. We just had one here, but usually it it doesn't go really far below the F Monon Rel life price.

that's very interesting to see. It happens every bull market that we stay more or less above this short-term holder five-month realized price. Very useful second on-chain chart is the realized return. Those are the people that sold in a month. So last dot here is the July Sellers and uh they got 15% return. That's green 15%. It's not much for bitcoiners. It's a lot for traditional investors, especially if you make that in a month. But still it's profit so it's good. I mean um blue that would worry me a little bit and red is what I expect in a bull market. So that's probably what's coming next. Well not not really more about the realized return than Bitcoin in profit. We know from all the Bitcoins when they are bought and most are bought below this level of 64,000 so they're all in profit. In fact 92% of all the Bitcoins, 92% is in profit right now and only 8% so those are the

people that bought at everything above 64. 8% of all the Bitcoins is in loss. So in total there's not much loss. Not much fear in the market which is good. Now the bonus chart and it's a new chart. I never talk about this chart. I tweeted it on X. Last week and it got a lot of questions and likes. So I included it here. It's Bitcoin minor revenue. And it's very interesting at the moment at the moment. So what we see is the blocks on the x-axis. Every 210,000 blocks. We have a halving. So there's a block every 10 minutes. 210,000 10-minute periods is four years. So every four years there is a halving. We just had one in April. And what happens at a halving is that miners Revenue Hales as well cuz they mine the new Bitcoins. And this is only new Bitcoins by the way. It's not the fees which is a small part of their

revenue so it's the it's the new Bitcoins that they meant um but after a halfing they get half of those new Bitcoins and their their revenue drops uh overnight which is horrible for any business to be in um and they have to recover from that so usually what happens uh is that the uh small miners that have all equipment insufficient equipment us uses a lot of electricity and also have high electricity prices they can't mine at a profit anymore so they drop out they they just quit they're they're they're running at a loss so they they have to quit and the new miners the miners with new equipment the latest and greatest in Hardware very effic ient and lowest prices maybe free energy prices those are the ones that can still produce at a profit those Will Survive so this ShakeOut every halfing is a a very important event uh uh Bitcoin specific structural event that happens every four years and the the entire Bitcoin Market Bitcoin itself has to survive that shake out and we're in

the middle of that right now. It's always very volatile. Um, hash rate drops. Everybody's talking about Minor capitulation and that the miners will just quit, which never happened by the way. It's just fud. But what's important is that uh this industry is growing a lot. So in the beginning, a monthly Revenue was only about a million for all the miners in the world. Right now we're talking over $1 billion doar every month in Revenue for Bitcoin Miners. And at the peak, it was 2 billion uh dollars. So that half to just under $1 billion. And what we see now is very interesting. The only way uh for miners to recover for mining Revenue to recover, which it always did, is for bitcoin price to double. So the number of new Bitcoins in a block half uh so the price has to double to keep the mining Revenue the same. And that's what we're waiting for. So what's very important is that we we we see a bottom in the mining revenue from where it grows into the next bull market so we

see a bottom here too after 2016. And here, same thing after 2012, halving, there's a bottom and then, buff, the bull market starts. It may very well be that we have seen the bottom of this, uh, ShakeOut, this, this after halving, minor, uh, ShakeOut in June, because July already had a higher, uh, minor revenue than June. So, uh, what we also see is that difficulty, so the hash rate basically jumped today with plus 10%, and that indicates that the old miners, the old and small, uh, miners indeed left the market, and that the new equipment is taking over. Um, and we'll see rising hash rates, which is good for Bitcoin security and rising prices into the future. So, that's very interesting to watch. Thank you very much for, uh, viewing this video. Please subscribe, and I'll make this video every month, first of the month. Uh, I give my, my market view. Thank you again, and see you next time.

PlanB Bitcoin Analysis August 2024

PlanB 100trillionUSD (2M Twitter followers), creator of the Stock-to-Flow (S2F) model.