Inflation in the US came again higher than expected at 8.6%. And though the CPI is a rigged number, it’s still at a 40-year high. 

 

Everybody wants to know what’s going on with the bitcoin price.

 

Is it an inflation hedge? Is it a store of value?

 

First of all, it’s essential to realize that bitcoin has outperformed all asset classes during our lifetime’s most insane monetary policy expansion. Since Q2 of 2020, bitcoin surged 150%, but S&P 500 is up 28%, Nasdaq 18%, and gold only 6%.

However, if you are still frustrated by the latest bitcoin crash, here are three data that will help keep your hands firmly on the wheel. 

 

Strong hands are still not selling

As you can see on the chart from Blockware Solutions below, bitcoin has an all-time high in the amount of supply that hasn’t moved for at least a year. Currently continue to climb over 65.5%. 

That means that large bitcoiners and institutions view bitcoin as a value store. And despite all the madness, the largest holders keep holding.

To put it in another way, while we have one of the largest turmoils in financial history, there’s an all-time high in the number of bitcoin holders. 

Stock-to-flow model predicts $500,000 

There are numerous models on how to value bitcoin. One of the most commonly used has been the stock to flow (S2F) model, an indicator used in commodities for decades and now adopted by an analyst PlanB.

 

PlanB argues that bitcoin’s growing scarcity will increase its value. In one of the recent tweets, PlanB wrote, 

 

“The good news: model still points to $500K after 2024 halving.” 

 

In other words, the model says that the bitcoin could be 20x from the current price in two years.  

Bitcoin crashes are temporary

 

Guess how many times Bitcoin crashed in its history? 

 

With the current crash, it’s 16 times. 

 

The behavior of the bitcoin price thus far emphasizes only one thing: Crashes are temporary. Sometimes the market recovers with lightning speed, as it had in 2021. Other times, like in 2017, the reversal takes three years.

 

No one articulated this phenomenon better than Michael Saylor, “Bitcoin is volatile, but it will go up forever.” 

 

In other words, what is important to remember is the long-term view. If you look at the bitcoin trendline below, it’s reasonable to predict a $1 million price by 2030. 

Final thought

To be clear, buying after a crash isn’t for the faint-hearted. But you will thrive if you’re bold enough to ride the volatility and buy when everyone else is selling.