$1 Million Bitcoin forecast is over-hyped - Alex Krüger
|- The cryptocurrency expert busts stock-to-flow ratio myth.
- BTC/USD is growing slowly inside the current range.
Bitcoin (BTC) is sandwiched between SMA100 (Simple Moving Average) and SMA200 on a daily chart. The first digital asset has been rangebound since thee beginning of November, after a failed attempt to settle above $10,000.
At the time of writing, BTC/USD is changing hands at $9,400 with marginal gains both on a day-to-day basis and on a day-to-day basis. While the price has been creeping higher after a dip to $9,073 on November 3, the upside momentum is still to gain traction.
Meanwhile, a prominent cryptocurrency analyst Alex Krüger believes that the forecasts about Bitcoin hitting $1 million is a bit stretched. He pointed out that the stock-to-flow ratio is not a reliable tool to determine Bitcoin's price in the long run.
The stock-to-flow ratio tracks the asset's circulating supply against the amount produced annually. According to Krüger, the model that based on Bitcoin's limited supply is inherently flawed, so as the forecast that BTC would cost a $1 million mark by 2025.
“The Stock to Flow model is to bulls, what the Tether Manipulation paper is to bears. Both based on fancy looking statistical models (more so the latter). Both are flawed. Doubt whoever believes in these extremes will change their minds. The mind believes what it wants to believe,” he wrote recently.
Krüger further explained that Bitcoin's price would be determined by demand, while the supply side was "fully deterministic". Thee diminishing supply is only important because it drives the demand, which is all that matters.
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