In the world of cryptocurrency investing, understanding price forecasting models is crucial for making informed decisions. One such model that has gained significant attention among Bitcoin investors and analysts is the Stock-to-Flow (S2F) model. Originally used in the commodities market, particularly for gold and silver, the stock-to-flow model has been adapted for Bitcoin by a pseudonymous analyst known as PlanB. But what exactly is the Bitcoin Stock-to-Flow model, and how reliable is it in predicting Bitcoin’s price movements?
In this article, we’ll break down the fundamentals of the Bitcoin Stock-to-Flow model, how it works, why it’s controversial, and what critics and supporters alike have to say about its accuracy.
What is the Stock-to-Flow Model?
The Stock-to-Flow (S2F) model is a method for valuing scarce assets based on their supply. It is calculated using the formula:
Stock-to-Flow = Stock / Flow
- Stock refers to the total existing supply of the asset (in this case, Bitcoin).
- Flow refers to the annual production or the amount of new supply entering the market.
A high stock-to-flow ratio indicates scarcity, which traditionally implies a higher value. For example, gold has a very high S2F ratio because it is difficult and slow to mine compared to the amount already in existence.
Applying Stock-to-Flow to Bitcoin
Bitcoin is unique among digital assets because of its finite supply — only 21 million BTC will ever exist. New Bitcoins are introduced into circulation via a process called mining, and this rate is programmed to slow down over time due to an event known as the Bitcoin halving, which occurs approximately every four years.
Each halving reduces the block reward miners receive by 50%, effectively reducing the flow in the S2F equation. As flow decreases while stock remains relatively constant or grows more slowly, the S2F ratio increases — suggesting higher scarcity and, theoretically, a higher price.
For instance:
- Pre-2020 halving: Bitcoin’s S2F was about 25.
- Post-2020 halving: It jumped to around 50.
- Post-2024 halving: It’s projected to increase again.
PlanB’s original Bitcoin S2F model, introduced in 2019, posits that this growing scarcity should drive Bitcoin’s price upward over time in a predictable manner.
S2F Model vs. S2FX Model
PlanB later introduced an updated version called the Stock-to-Flow Cross Asset Model (S2FX). This model expands on the original S2F by attempting to place Bitcoin within the same valuation framework as traditional assets like gold, silver, and real estate.
S2FX treats Bitcoin’s evolution in “phases” or “clusters,” corresponding to different levels of institutional adoption and perception — from proof of concept to a full-fledged store of value.
According to the S2FX model, each phase shift leads to a dramatic increase in price based on the asset’s stock-to-flow value at that stage.
Predictions from the Bitcoin Stock-to-Flow Model
PlanB’s original S2F model predicted that Bitcoin could reach price levels around $100,000 to $288,000 after the 2020 halving. While Bitcoin reached an all-time high of about $69,000 in November 2021, it fell short of the S2F’s forecast.
Despite the miss, supporters argue that the model is still valid over the long term, especially given Bitcoin’s inherent volatility and external market factors like interest rate hikes, macroeconomic instability, and regulatory scrutiny.
Criticisms of the Bitcoin Stock-to-Flow Model
While the S2F model has its followers, it has also faced substantial criticism from economists and analysts. Here are a few common critiques:
- Overemphasis on Supply: Critics argue that the model only focuses on supply (stock and flow) while completely ignoring demand-side variables like investor sentiment, regulation, and market liquidity.
- Lack of Real-World Application: Some financial analysts believe applying S2F to a digital asset like Bitcoin, which lacks intrinsic value and cash flows, is flawed.
- Failed Predictions: The model’s forecast for Bitcoin to hit $100k by late 2021 did not materialize, raising questions about its predictive power.
- Statistical Concerns: Detractors argue that the model fits historical data too well, leading to accusations of data mining or overfitting.
One notable critic is Ethereum co-founder Vitalik Buterin, who publicly called the model “not useful” after Bitcoin failed to meet its projected targets.
Supporters of the S2F Model
Despite criticism, many in the crypto community still believe the S2F model provides a valuable long-term perspective. Bitcoin’s monetary policy is hard-coded and predictable, which is unlike fiat currencies or even commodities. The model also resonates with Bitcoin’s narrative as “digital gold,” due to their shared characteristic of scarcity.
In particular, long-term investors (HODLers) see S2F as a way to zoom out of short-term market volatility and focus on Bitcoin’s macro trends.
Is the Stock-to-Flow Model Still Relevant?
Whether you believe in its price predictions or not, the Stock-to-Flow model remains a popular heuristic for understanding Bitcoin’s value proposition — scarcity. It may not provide a precise short-term roadmap, but it offers a framework to conceptualize how Bitcoin’s decreasing issuance could influence its market value.
However, relying solely on S2F for investment decisions would be unwise. Instead, it should be considered alongside other indicators, including:
- On-chain analytics (wallet activity, exchange inflows/outflows)
- Market sentiment
- Macroeconomic indicators (interest rates, inflation)
- Regulatory developments
Current Stock To Flow Bitcoin Reading
The reading above shows a 10 day and 463 days reading (here 463 days means the S2F since the last Bitcoin halving.
108.36 suggests Bitcoin is currently more scarce (on average over the last 10 days) than over the longer 463-day window (91.43), possibly due to a reduction in new coins being mined post-halving.
According to the Stock-to-Flow model, Bitcoin “should” be priced between $191,000 and $318,000 based on its current level of scarcity.
Bitcoin’s next halving could happen on March 31, 2028–05:40:33 UTC where where the block reward will drop from 3.125 BTC to 1.5625 BTC. This event will reduce Bitcoin’s flow by half again, doubling the S/F ratio if all else remains constant — making BTC even more scarce.
Conclusion
The Bitcoin Stock-to-Flow model has been instrumental in shaping how many people perceive Bitcoin’s value, framing it as a digitally scarce asset similar to gold. While it has its limitations and its predictions don’t always align with real-world market behavior, the model continues to spark debate and influence investor sentiment.
Whether you see it as a revolutionary valuation tool or an oversimplified economic model, understanding the S2F concept can deepen your knowledge of Bitcoin’s potential trajectory.
- Top DePIN Projects To Watch Out For in 2025 – April 24, 2025
- How To Read A Crypto Whitepaper? – April 24, 2025
- Different types of Crypto Whitepapers 101 – April 24, 2025