The Bitcoin Stock-to-Flow (S2F) model, one of the most bullish forecasting tools in the cryptocurrency space, has ignited a fierce debate among analysts and investors. Popularized by the pseudonymous analyst PlanB (Twitter: @100trillionusd), the model uses the ratio of existing Bitcoin supply to annual new issuance to predict price movements, especially around the quadrennial halving events. PlanB's original report, "Modeling Bitcoin's Value with Scarcity," has been translated into multiple languages and widely circulated.
How S2F Works and Its Bold Prediction
The S2F model borrows from commodity analysis, where gold has the highest stock-to-flow ratio. PlanB argued that Bitcoin is the first scarce digital asset, combining the scarcity of gold with the transferability of the internet. Using 111 monthly data points from December 2009 to February 2019, he calculated a strong correlation between Bitcoin's S2F ratio and its market value. His conclusion: after the May 2020 halving, Bitcoin's market cap could reach $1 trillion, translating to a price of $55,000 per coin.
“I queried the actual number of blocks per month directly from the Bitcoin blockchain via Python/RPC/bitcoind,” PlanB explained in his paper. “The actual block count deviates significantly from the theoretical 10-minute interval, especially in the early years. I also corrected for lost coins by arbitrarily disregarding the first million coins.” Despite the adjustments, PlanB later admitted: “The S2F model is not dead accurate, but an order of magnitude right.”
Criticism: A Recipe for Blind Faith
Not everyone is convinced. On April 1, 2020, Seattle-based crypto hedge fund Strix Leviathan published a report titled “Lost in Space – Bitcoin and the Halving,” which challenged both halving narratives and S2F models. Portfolio manager Nico Cordeiro warned: “Exerting blind faith in one specific outcome leaves one’s investment subject to the whims and beliefs of the crowd while surrendering returns to the randomness of luck.” The report described S2F econometric models as too simplistic, ignoring demand-side variables and market structure.
The criticism gained traction after Bitcoin’s “Black Thursday” on March 12, 2020, when prices crashed to $3,800, seemingly defying scarcity-based predictions. Yet supporters note that prices quickly recovered above $7,000, suggesting the model’s long-term framework may still hold.
Empirical Backing and Nuance
Meanwhile, a separate report published on March 27, 2020, titled “Stock-to-Flow Influences on Bitcoin Price,” attempted to debunk the model but ended up supporting its core thesis. Using an ARDL bounds test, the authors concluded: “We reject the hypothesis that stock-to-flow does not have a non-spurious influence on the U.S. dollar price of Bitcoin.” However, they noted that the effect is more conservative than PlanB’s OLS and VECM estimates, pointing to potential series errors in the original analysis.
PlanB remains undeterred. On April 5, he tweeted a quote from 19th-century logician Carveth Read—“It’s better to be approximately right than exactly wrong”—and reiterated his confidence. “Both the cross-asset S2F model (based on gold, silver etc.) and the time-series model point to a $1 trillion+ market cap in 2020-2024,” he wrote. “That translates to $55K+ BTC price.”
The debate reflects a deeper tension in crypto analysis: the desire for simple narratives versus the messy complexity of markets. While the S2F model has succeeded in focusing attention on Bitcoin’s scarcity, its limitations serve as a cautionary tale. As the May 2020 halving approaches, only time will tell whether PlanB’s “order of magnitude” prediction is vindicated.