We always read about PlanB’s predictions. They have the guts (or foolishness) to make Bitcoin price predictions. Which is never easy because no one is a fortune teller. We know there is a trend. And we know that the price fluctuates. But, when it comes to predictions, precision is practically impossible. An exact number on an exact date. Mission Impossible. However, we all love to make predictions. Why is PlanB so wrong? Well, your mission is to predict the future. And it is not an easy task.
Of course, to invest it is mandatory to make predictions. An investor invests thinking of a better future. The idea is to invest today, to receive profits in the future. That implies some optimism in the asset in question. The asset is assumed to be undervalued and sooner or later the market will recognize its true potential. What is the problem? Well, the problem is that so much ambiguity is not enough. People want precision. Which represents a great inconvenience because, as I said before, precision in these matters is impossible. The solution? Predict accurately by pretending that we know what we are talking about.
It is virtually imperative that an exchange, fund, analytics firm, or crypto company have their prediction. Otherwise, the public (customers) lose interest. Additionally, the public may fall into the error of thinking that without an official prediction no one can claim to be an expert in the field. Now, the predictions should be optimistic. Otherwise, the thing becomes counterproductive. In politics, something similar happens. During the campaign, our candidate is always the winner. After all, nobody wants to vote for a losing candidate. This “white lie” is necessary to have a chance. What is sought is that the prophecy is fulfilled due to the power of faith.
People like to be lied to. And, in the crypto space, there are lies everywhere. Some come true. Others do not. But we must all have a strong narrative. That is the detail. The lie, to be credible and have a chance to come true, must be expressed without hesitation. In this space, predictions serve as causes due to their motivating effects. It is not that you have a crystal ball in case you achieve the goal. What really happens is that the campaign was successful. Now we are all working for Bitcoin to reach the goal of USD 100,000 per unit by the end of the year. What is the prediction? USD 100,000 by the end of the year.
PlanB is popular because it is part of the libertarian brotherhood. These libertarians are inspired by libertarian dogma. We have the conservative view of neoclassical liberalism, the Chicago school, and the Austrian school in all of this. One concept in particular: The “marginal value theory” that highlights the importance of scarcity on the issue of value. Obviously, here I am talking about the stock / flow model. PlanB’s favorite and the one he uses to make his predictions. Most libertarians look in the mirror with this model. After all, this model was built on “great truths.”
Now, what is the problem? The problem lies in the results. The model may have the support of libertarians. But it is not supported by the evidence. Get it right sometimes. What does this mean? Well, it means that this prediction model is not very good at predicting. Lately, in particular, it is always well above the price. The funny thing is that few questions the validity of a prediction model that fails so much. The fault is often thought to be in the market. Seriously? That is like saying that we have the gift of prophecy, but we are wrong because people always do something else.
The stock / flow model has its clear limitations. Obviously we have a biased model. It is not a total error. But it is incomplete. You consider inventory and flow, but you miss something of the utmost importance: The demand. I would say that it does not weigh the human factor and macroeconomic and geopolitical complexity. For the stock / flow model there is no world economy. Bitcoin scarcity is king. But it does not analyze the existence of altcoins. It does not weigh the mood of investors. It does not weigh monetary policy. It does not weigh the dollar exchange rate. It does not weigh inflation. It all comes down to the scarcity that will fix it all. That may have been true in Austria or Chicago in the last century. But economic thinking has evolved. Diamonds are more valuable than water. But that is not an absolute truth. That is, some conditions apply.
Let’s say PlanB’s prediction is true. USD 98,000 by the end of the year. That does not confirm the validity of your model. USD 100,000 is the prediction of half the world. It is a round number, possible, and of great psychological sonority. The optimism is. Liquidity too. It is technically possible. And it is highly probable. Nevertheless, everything that is happening is much more complex than simply the current inventory and flow of Bitcoin.
I have nothing against PlanB. I have nothing against the inventory and flow of Bitcoin. I find the limited supply of Bitcoin and the phenomenon of halvings great. In fact, I always read PlanB’s predictions with great interest. I always regret when your predictions don’t come true, for being a stakeholder. For me, the price goes to the moon. Talk about PlanB in this article as an excuse to talk about the complex world of predictions.
“My friend, who knows a lot about it, said that Bitcoin will hit $ 100,000.” “Elon Musk said that Bitcoin would exceed $ 100,000.” “There can only be 21 million BTC.” These are the things that one always hears in this space. These are phrases that comfort people. The truth is that nothing is safe. But that “truth” says nothing and leaves us with a great void. The public loves a prediction that sounds authoritative. It is part of the show. Like it or not, predictions are part of the equation. It would be a mistake to underestimate the subjective element in all this. Illusions have the power to guide us. They show us a way forward. They give us hope. In a sense, predictions, accurate or not, are necessary.