The longer the STF model holds, the more newcomers become convinced it can't fail, irrespective of the creators warnings. As excitement builds, more people decide they shouldn’t sell below $100k. What might the sale pattern look like for these investors?
If you look at the responses to any stock to flow Twitter thread, you get predictions that look a bit like this curve. The wisdom of crowds? Not exactly. The above numbers are NOT where I think peak selling will happen. The chart is where people say or think they will sell, in theory. In practice, Bitcoin newcomers usually sell early and buy back towards the top.
In 2017 when Bitcoin was worth €1,200 I thought it could track the growth of the web and go higher. But the quick jump to €18,000 meant we were in a mania period. After a 75% fall to €3500, I said it had never been stronger to the independent.ie.
No one can call the top, but Everyone is getting rich articles , or maybe this time; ‘FIAT is over, gold is getting flipped, we’re going to $1M!’ articles, are good indicators. This is often the point where newcomers buy back in. Who will be the new parabolic Trav?
I expect the following to play out among more experienced market participants:
- Some STF watchers sell off well before $100k (sell the news) and bank significant gains from $3-4k.
- Others will use STF in conjunction with the Mayer Multiple and other metrics and chart patterns, which may lead to selling before or after the coveted $100k.
- Long term hodlers won’t sell at any price.
- In 2020 the model will be perceived as ‘under the radar’ for newcomers until we approach previous all time highs. (Google trends search data can convince you of anything if you input enough variations. Halvening, STF, moon, etc).
- Some are saying that historically we tend to ‘overshoot’ the model and hope for the same to happen again. Sample size be damned.
- If the price breaks $20k, Much more STF believers, who buy in above this level, will depend on the model holding up and will be uncomfortable selling below $100k, looking for a quick win. Crazy predictions will really get going if $100k holds for any length. Queue ‘End of Fiat’ articles.
- If the model breaks down and price stays below $10k for a few years, obviously none of this applies.
Many people will plan to sell if the model gets overshot, but in practice they get carried away and don’t sell till it's way too late. Maybe those newcomers sell at $120k, panic buy back in at $160k. The price peaks at $200k and they ride it all the way down to $40k. Welcome to Bitcoin.
Maybe the Mayer Multiple will be the limits that people cling to, or something else like Willy Woos Top Cap. Maybe an anonymous Duck or Wolf will guide us. Maybe we just go sideways. But there is something about the simplicity of Stock to Flow, and how many paid group leaders are already representing it as fact, that I think will make it an unbeatable meme.