The mathematical model that has explained Bitcoin’s price for years no longer works. This is the central premise of an analysis published by investment expert Tommaso Scarpellini on March 27, 2026.
The main theory presented by Scarpellini in the Financial Serenity newsletter may be off-putting to many. Scarcity (the preeminent bullish argument) does not dominate the price of Bitcoin.
Scarpellini cited two models that have historically dominated the Bitcoin valuation narrative but are now “failing miserably.”
The first is From stock to flow (SCIENCE FICTION)measures the value of an asset in relation to its relative scarcity.
According to this metric, Bitcoin’s S/F is 113, more than double that of gold, which has a ratio of 60. Logically, it follows that Bitcoin is more valuable than metal.
However, the analyst notes that while this model “was a good depiction of Bitcoin trends until 2022, it is failing today” and observes that “Bitcoin is being talked about less and less” within the community.
The second model in question is Half price return (HPR), commonly known as “Rainbow Chart”.
This is a non-linear regression constructed based on the Bitcoin price on each halving date. HPR predicts that prices will rise on a predictable trajectory with each halving. But according to Scarpellini, “this model fails to account for the evolution of the market, and the cycle remains stuck at the bottom of the rainbow.”
Because of these alleged flaws in the model, Blockchain Center, the organization that created this graph, had to make several modifications to the model over time to adjust it to the price of Bitcoin.
In any case, what needs to be made clear is that “Rainbow Graph” is not serious. As explained by CriptoNoticias, the creator of this model, Holger Rohm himself, points out that this is nothing more than a meme or joke invented to boost the morale of Bitcoiners.
Additionally, it’s worth clarifying that: The fact that a model does not correctly predict a particular cycle does not mean that the model is ultimately invalid.. For example, one could argue that the relevant S/F evaluation period is decades rather than months.
But Scarpellini’s criticism is structural, not technical. The problem is not the model’s tuning, but the underlying assumptions of the model.
Bitcoin as a high beta asset
If scarcity isn’t driving Bitcoin’s price, then what is driving its price fluctuations? For analysts, the answer is: The correlation between Bitcoin and US technology indexes is increasing.
“In my opinion, the correlation has increased to the point where the S&P 500 and Nasdaq 100 are kind of volatile assets,” he writes. In practice, this means that Bitcoin amplifies stock market movements. When the Nasdaq rises, Bitcoin rises further, and when it falls, it falls further.
According to Scarpellini, the underlying reasons are: “The price of Bitcoin only responds to its demand, and demand does not depend on scarcity. This has probably never happened before.”.
This is perhaps the most provocative part of the passage. If demand for Bitcoin is not actually tied to scarcity, but rather to speculative appetite, global liquidity, and institutional flows, then the narrative structure that many Bitcoiners rely on will be built on a weak foundation.
The weight of war with Iran
This is where the analysis immediately becomes meaningful. Scarpellini directly links geopolitical conditions to Bitcoin’s performance. The Iran conflict has pushed the one-year breakeven inflation rate, a measure of bond market inflation expectations over the next 12 months, to about 5%. This increases expectations for short-term interest rates and reduces the liquidity available for assets deemed ‘risky’.
“If the short-term cost of money rises, the liquidity the Federal Reserve injects into the system and President Trump’s fiscal stimulus will have less of an impact on the concept of Bitcoin scarcity,” the analyst argues. And he threw away the comparison with gold. Gold benefits from large purchases by central banks, and government funding, which Bitcoin has yet to enjoy. “Bitcoin therefore naturally follows a movement much closer to that of the money market,” he concludes.
things change in the long run
However, despite what many might think after reading this far, the analysts have not concluded with a bearish recommendation.
they are The long-term bullish argument is based on three pillars.That the market believes the inflationary effects of the energy conflict will be temporary, that the scarcity of Bitcoin is real (there will never be more than 21 million Bitcoins), even if Bitcoin is not “monetized” in the current cycle, and that institutional flows (ETFs, corporate strategies) will continue to grow.
“Longer term, there could be some interesting gaps in valuations,” he wrote. His final rating on the BTC/USD pair is “Hold”, with the caveat that anyone buying at these levels must have enough time to absorb what the market estimates to be a correction cycle of up to five years.
Scarpellini’s reading is, in short, the reading of someone who does not believe in Bitcoin out of conviction, but who frankly declares, “Bitcoin is of no use to me,” but who does believe in the structure of the industry that supports Bitcoin. This distinction puts both analyzes in an uncomfortable position in the eternal debate between maximalists and skeptics.
(Tag translation) Analysis and research
