The coming holiday season should be a time of joy, but the crypto-market is down and inflation has been on the rise. Meanwhile, Huobi Research recently published an article looking into the Taper phenomenon and how it could affect Bitcoin’s price in ways few have considered.
T meets B
Early in November, the Federal Reserve announced that it will be cutting down or “tapering” asset purchases. This would be a cutback of $15 billion per month. During the COVID-19 pandemic, maintaining a larger Fed balance sheet was one way to support the American economy. However, crypto-investors need to keep in mind how this could impact the global crypto market.
In particular, Huobi Research’s report warned that the Fed’s action could cause Plan B’s Bitcoin stock-to-flow model to fail. The anonymous creator of the Bitcoin S2F model had previously estimated that Bitcoin would hit a price of $98,000 before the end of November.
Alas, Huobi Research’s report countered,
“Why does the ‘victorious’ Bitcoin S2F model suddenly fail? Because PlanB only considered the monthly SF ratio of Bitcoin and historical Bitcoin price data when constructing the model, but ignored the impact of external macro changes on the market.”
Here, it’s essential to note that Plan B uses not one, but three models to predict Bitcoin’s price. What’s more, Plan B clarified that November’s $98,000 prediction is based on his floor model…