Bitcoin Analyst PlanB Says No BTC Supercycle in Sight, Market Participants Irrational
Quantitative investor and creator of the BTC stock-to-flow model PlanB says that he doesn’t see Bitcoin igniting a supercycle that can take it to $1 million this cycle.
In a new tweetstorm, PlanB asks his 336,200 followers to participate in a game without revealing its purpose.
“Game time: please give me a number between 0 and 100. Only 1 number, no explanation, no questions. The winner is the person whose number is closest to 2/3 of the average of all numbers.”
In a subsequent tweet, PlanB says the poll was a Keynesian beauty contest, which is designed to gauge the rationality of market participants. The analyst cites the Chicago Review, which outlines how market participants can be grouped according to their level of thinking. First-level thinkers do very little thinking when investing while third-level thinkers are able to anticipate what other investors are thinking to make more calculated decisions.
PlanB highlights that the result of his poll reveals that most participants in the crypto markets are irrational.
“Ok, so this is Keynes Beauty Contest. Results are usually like the chart below. Spikes at 50, 33, 22 and 0. Indicating zero-level thinking, first-level etc. Rational choice is zero, but the average/market is not rational. So … no Bitcoin supercycle in my opinion.
The right answer is not the key thing here. The key is to know there are zero-level thinkers (>50), first-level (~33), second-level (~22), x-level (~0-5). Also, know where you stand in the pecking order. Zero-level is not great. X-level is too rational for some cases (e.g. investing).”
Crypto executives have floated the possibility of a Bitcoin supercycle that could potentially catapult BTC between $1 million and $2.5 million. PlanB says these price targets are likely out of the question, suggesting that most investors are still not thinking ahead and don’t know the inherent value of the leading crypto asset.
“You think all other people are also rational, but that is not the case. A lot of people don’t think at all, or don’t understand (and still act). Most people only think one or two steps ahead. The market is ‘most people.’”
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Author: Daily Hodl Staff