Among the hundreds of Bitcoin price forecasts, the Stock-to-Flow (S2F) model has gained extraordinary traction by predicting that Bitcoin will reach $55,000 after the 2020 halving. Popularized by the pseudonymous analyst Plan B (@100trillionusd), the model treats Bitcoin like a scarce commodity such as gold, dividing the existing stock (total coins mined) by the annual flow (newly mined coins). Plan B's widely translated research article, 'Modeling Bitcoin's Value with Scarcity,' has become a cornerstone of bullish Bitcoin narratives.
The Logic Behind S2F
The model is not unique to Bitcoin. Gold, with an S2F ratio of roughly 62, has historically been valued as the ultimate store of value due to its extreme scarcity. Plan B argued that Bitcoin is 'the first scarce digital object the world has ever seen,' combining gold-like scarcity with the ability to be sent over the internet, radio, or satellite. He compiled 111 monthly data points from December 2009 to February 2019, querying actual block counts from the Bitcoin blockchain (since blocks are not always produced exactly every 10 minutes, especially in the early years). To adjust for lost coins, Plan B arbitrarily excluded the first seven months (approximately 1 million coins) from the stock calculation.
The model's central forecast: After the May 2020 halving, Bitcoin's market capitalization would reach $1 trillion, translating to a price of $55,000 per coin. This prediction hinges on the halving's sharp reduction in supply growth.
Criticism: Is the Model Too Simplistic?
Not everyone is convinced. On April 1, 2020, the Seattle-based crypto hedge fund Strix Leviathan published a report titled 'Lost in Space – Bitcoin and the Halving,' which systematically deconstructs the S2F narrative. 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 argues that both the halving narrative and the S2F model could be 'false narratives' unsupported by rigorous econometric evidence.
Even Plan B himself does not claim perfection. On April 5, 2020, he tweeted a quote from 19th-century logician Carveth Read: 'It’s better to be approximately right than exactly wrong,' adding that the S2F model is 'not dead accurate, but an order of magnitude right.' The model's credibility was tested when Bitcoin plunged to $3,800 on 'Black Thursday' (March 12, 2020) due to COVID-19 market turmoil, only to recover above $7,000. Critics point to this volatility as evidence that no static model can capture black-swan events.
Defending the Model: Significant Influence Confirmed
Despite skepticism, a March 27, 2020 study titled 'Stock-to-Flow Influences on Bitcoin Price' attempted to validate the model using an Autoregressive Distributed Lag (ARDL) approach. The study concluded: 'The bounds test for a level relationship in the ARDL model provides very robust evidence to reject the null hypothesis and conclude that stock-to-flow does have a significant influence on the U.S. dollar price of Bitcoin.' However, the analysis also noted that the coefficient estimates are more conservative than those from ordinary least squares (OLS) or vector error correction models (VECMs), suggesting that the relationship, while real, may be weaker than Plan B claims.
Looking Ahead: Halving Hype vs. Market Realities
Plan B remains confident, noting in early April 2020 that 'BTC has been oscillating around the S2F value of $7,000 for 2.5 years now, just like before the 2016 halving ($300) and before the 2012 halving ($6).' He expressed excitement about 'adding another zero after the halving in May.' Yet, the broader crypto community remains divided. Strix Leviathan urges investors to treat the S2F model as one tool among many, not as a guarantee. With Bitcoin trading around $7,000 in early April 2020, the journey to $55,000 appears massive—and whether the S2F model represents a genuine signal or a self-fulfilling prophecy is yet to be determined by the market.