One of the project defining characteristics of Bitcoin is the price volatility. Because the price of Bitcoin could fluctuate as much as 15% in the early days and also there is a daily returns of across 30-60 days, when the standard deviation is measured.
The Sierra Leone’s leone, Uzbekistan’s So’m and Nigerian’s naira is at par with Bitcoin in terms of fluctuation and purchasing power.
In the last twelve months, Bitcoin’s volatility has dropped in recent years between 2-4% and in the crypto-space, Bitcoin price prediction has continued to be a well-trodden corner. n
Dozens of analysts study charts to unearth subtle shifts in Bitcoin’s price to help discern where the cryptocurrency might move to next.
More broadly, commentators have suggested that Bitcoin’s price will ultimately go to zero, while others have said there is no theoretical limit to how high the cryptocurrency could go.
Among all these models and predictions is an idea that has captured the imagination of plaudits and critics alike: the stock-to-flow model.
The idea behind it is simple: as Bitcoin’s scarcity continues to increase, so will the price. Thus far, as the above chart appears to signify, the model has largely tracked the price of Bitcoin.
This has led to intense debate about the merits of the model: some believe the model is the reason why institutional investors have become so involved in the space – it suggests Bitcoin will 10x in value over the next few years.