Wall Street may be surprised and caught off guard by Bitcoin’s post-halving performance

Bitcoin price just hit a new yearly high after breaking through $12,000 and could be preparing for an explosive rise. The first cryptocurrency in history could finally be entering a new uptrend. If this asset continues to follow the Plan B stock-to-flow analysis model, Wall Street could be in for a shock and have to adjust their plans to keep up with Bitcoin’s exponential growth curve.

Institutions begin looking at Bitcoin as a hedge against inflation

Bitcoin is unlike any other financial asset that has come before it. While it shares several key similarities with gold, the digitally existing cryptocurrency offers many more advantages beyond the shiny precious metal. It takes up no physical space and cannot be counterfeited or copied. It is easy to store, simple to transfer, and extremely durable. Best of all, it is not controlled by any third party or government, and there will only ever be 21 million BTC.

Its limited, commodity-like supply makes it extremely scarce compared to fiat money supply, and therefore an ideal store of value and hedge against inflation.

Because of this, Wall Street suddenly became interested in this digital asset, just as gold broke through its all-time high and attracted Warren Buffett. Hedge fund manager Paul Tudor Jones became the first professional fund manager to eat crabs by comparing Bitcoin to gold and claiming that it will be the fastest "horse" in "fighting inflation."

Others have taken notice. Recently, Nasdaq-listed MicroStrategy disclosed its purchase of 21,000 BTC to the SEC. For a public company to withdraw such a large sum from its reserve funds demonstrates how valuable Bitcoin is.

Several mathematical models have been created to try to predict the long-term value of Bitcoin based solely on its scarcity. Among these models, Plan B’s Stock-to-Flow (S2F) model is the most popular, suggesting that once the halving occurs, the price of Bitcoin will quickly double.

Analyst Preston Pisch said that if the price of Bitcoin continues to rise and follows the predictions of the S2F model, Wall Street will be very shocked and caught off guard, and they may need to adjust their price expectations.

S2F model causes volatility in Wall Street stock market

Preston Pysh, a Bitcoin expert who frequently shares fundamental insights on the first cryptocurrency, said that if Bitcoin continues to follow the S2F model, Wall Street may "not know what to do next." Funds from traditional U.S. markets and the stock market may flow into Bitcoin, making the market more volatile.

The reason, he said, is that “market participants are used to looking at things in a linear way,” rather than the exponential approach crypto analysts use for long-term analysis.

BTCUSD linear-log scale comparison | Source: TradingView

Bitcoin as a technology has been growing along an exponential growth curve. Therefore, the price movement of cryptocurrencies is often exponential, rather than the linear movement of stocks, gold, and other assets.

The chart above shows the price of Bitcoin on both linear and logarithmic scales. If the cryptocurrency continues along the path set by the SF2 model, the asset could one day be priced at $100,000, or even $400,000 or more.

BTCUSD linear-log scale comparison | Source: TradingView

The exponential model’s upside potential for Bitcoin is far greater than other assets that grow linearly, and we can clearly see why Wall Street might be shocked to see a move that beats linear asset prices so quickly.