This BTC stock-to-flow model Gained a lot of attention during the bull market as it was correct on several price predictions, however, the model was also biased several times during the bull market.
Buterin joins a growing list of critics of the model designed to predict the price of BTC:
Stock-to-flow really doesn’t look good right now.
I know gloating and stuff like that is rude, but I think financial models that give people a false sense of certainty and that numbers are set to go up are harmful and they deserve all the ridicule. https://t.co/hOzHjVb1oq pic.twitter.com/glMKQDfSbU
—vitalik.eth (@VitalikButerin) June 21, 2022
The S2F model quantifies the price of an asset based on scarcity and is primarily used for popular metals such as gold and silver. The BTC S2F model popularized by PlanB suggests that the price of BTC will continue on a steady and impressive upward path, earning roughly 10x returns every four years.
This Key Issues with the S2F Model Many critics point out that this is a one-sided estimate that only takes into account the supply side of BTC while assuming demand will continue to grow.
While BTC demand has shown significant growth, other factors, such as inflation fueled by the Fed’s money-printing spree, have significantly impacted consumers’ purchasing power. Therefore, the S2F model does not take into account several macroeconomic factors that mainly affect market sentiment.
Correct, the model only considers scarcity/s2f-ratio, which is the only model input. All the rest, demand, macro, encryption, covid, war, etc., cause deviations. The model is very rough. Also, the current extreme macro backdrop causes all indicators (rsi, 200wma, etc.) to show extreme values.
— PlanB (@$100 Trillion) June 20, 2022
Plan B responded to Buterin’s criticism, saying “people are looking for scapegoats for their failed projects or bad investment decisions.”
After the collapse, people are looking for scapegoats for their failed projects or bad investment decisions. Not only newbies, but as “leaders”, fall victim to blaming others and playing the victim. Remember those who blame others and those who are strong after a car accident. https://t.co/4nJdHq84pm
— PlanB (@$100 Trillion) June 21, 2022
According to the S2F model, BTC is scheduled to hit the $100,000 mark in late December 2021. While he has admitted in the past that external drivers are somewhat flawed, the model’s popularity at the height of the bull market was pushed down by most critics.
We’ll know by the end of 2021: S2F predicts that btc must be over $50k (or even $100k if you use a new model), while Dave’s model is under $30k. Dave also predicts the next top price at $81k, with S2F pointing to a (3x) multiple of $50-100k.https://t.co/yQk6GZvTdb
— PlanB (@$100 Trillion) September 3, 2019
The debate around the flawed financial model comes as BTC hit a new four-year low of $17,748. At the time of publication, the top cryptocurrency was trading at $21,321, up 4% over the past 24 hours.