Bitcoin at USD 100,000: stock-to-flow model failed?

Probably the most cited price forecast model for Bitcoin is being scrutinized – just not for the creator of the stock-to-flow ratio.

“I’ll void the stock-to-flow model if we don’t hit $ 100,000 by December this year.” The in June by PlanB, the originator of the Stock to Flow (S2F) ratio adapted to Bitcoin Twitter Asked ultimatum, come back like a boomerang now. The year has just ended, and where exactly was that $ 100,000? And what use is a model that has repeatedly failed grandly? Even the record high of around 70,000 US dollars in November was not even close to the six-digit exchange rate promised by PlanB. Not to mention the December performance, with Bitcoin correcting to $ 46,000. The stock-to-flow model has failed – you might think. But for PlanB everything is going according to plan.

What is the stock-to-flow model?

Bitcoin is a scarce commodity. Only 21 million bitcoin will ever exist. There are currently over 18.9 million BTC in circulation, just over 90 percent of all Bitcoin are already mined. The last Bitcoin should not be “mined” until 2140. This is because the block reward for miners halves every 210,000 blocks – roughly every four years – and delays the prospecting process accordingly. In 2009 miners received 50 Bitcoin for block generation, since the last halving in May 2020 it has been 6.25 Bitcoin. The inflation rate falls continuously due to the cyclical halving.

The stock-to-flow model or the stock-to-flow ratio describes the scarcity of an asset based on the amount in circulation that has already been achieved – the stock – plus the amount in circulation that is added each year – the flow. The higher the stock-to-flow ratio, the rarer the good. Originally used for the valuation of commodities such as gold or silver, PlanB, which never published its real name, adapted the model to Bitcoin. Due to the successive throttling of the new amount in circulation by the halvings, the stock-to-flow ratio increases constantly. The core thesis of the Bitcoin introduced in 2019 S2F model, which establishes a statistical connection between scarcity and price development, reads: Bitcoin is becoming rarer and the throttling by Halvings is the main price driver.


Bitcoin is unpredictable

The model’s popularity is explained by its bullish outlook: The model according to the Bitcoin exchange rate will rise to one million US dollars in July 2025. Music to the ears of all Bitcoin hodlers – reality wouldn’t thwart the bill. As early as 2019, PlanB got it wrong. For the post-halving phase in May 2020, the trader attested an increase to 55,000 US dollars. Right next to it: Bitcoin fell into the post-halving depression and struggled for months at the 10,000 mark.

The model is obviously flawed. The S2F model cannot predict events such as the mining ban in China or Elon Musk’s criticism of energy consumption, which have put the BTC course in a bad position this year. It does leave some room for maneuver. With the statement that the model would be invalid if Bitcoin did not rise to 100,000 US dollars in December, PlanB itself actually denied the validity of the price forecast.

PlanB: The model is intact

Actually. Because in December PlanB rowed back. One Tweet According to the model is still intact. “Crucially, at $ 51,000, BTC is still within one standard deviation of the S2F model (around $ 50,000-200,000). If BTC stays within the 1sd band for the next 2.5 years, then the S2F model is still valid and even useful to me ”. How useful a model is that remains intact within a price range of $ 150,000 remains to be seen.


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Bitcoin at USD 100,000: stock-to-flow model failed?

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