Bitcoin Structurally Sound Despite Fears of $10 Billion Selling Spree: Analyst

06.07.2024 / Payment system news

PlanB, the analyst behind the famous Stock-to-Flow (S2F) model, has stated that Bitcoin remains structurally sound despite fears of a $10 billion selling spree by Mt. Gox creditors and the German government. The move comes as the digital currency remains stuck in a bearish downward spiral below $57k. According to PlanB, the recent selling pressure is nothing to worry about because, structurally, BTC remains sound.

Image Source: PlanB on X

The Stock-to-Flow Model

PlanB is the creator of the S2F model, which is used to predict the future price of the premier digital currency. The model considers the number of BTC currently available in the market and the number of BTC being mined annually. Analysts use the S2F model to understand the premier digital currency’s movements better. The forecasted price is currently at $72k, and the actual market value is close to $56k, so there is a major short-term discrepancy between the two. PlanB is not bothered by it as, according to him, there is no structural weakness in the Bitcoin market.

Previously, in March, the forecasted price was $51k, while the index was hovering above $70k because of the major impact of spot Exchange Traded Funds (ETFs). Now, with significant selling pressure, there is yet another discrepancy. The main takeaway is that the S2F model focuses on long-term growth and doesn’t consider major price stimuli affecting the market in the short term.

Is the $10 Billion Selling Spree Going to Hurt Bitcoin?

The total value of Mt. Gox creditors and the German government’s holdings is more than 220,000 BTC, or in excess of $10 billion. The market is reacting after fears that these two organizations’ holdings will be up for grabs in the spot market in the coming weeks. Naturally, a price drop is expected because of this development.

However, the actual Bitcoin dumping has been limited to a few hundred million dollars, but it is expected to pick up pace. Nonetheless, the 220,000 BTC may not end up in the market as there is no clear indication from either the German government or the Mt. Gox creditors regarding their intentions.

It is safe to say that a portion of this huge stash will make its way online and may cause panic, as in the last couple of weeks. However, since January of this year, more than $14 billion has been pumped into spot ETFs, and that alone can handle the FUD in the market. The actual impact of these developments can only become clearer during the ongoing third quarter.