Bitcoin S2F Model Gives a False Sense of Certainty, Says Vitalik Buterin

Co-founder of Ethereum Vitalik Buterin criticized the controversial Bitcoin (bitcoin) stock-to-flow (S2F) model, promoted by an anonymous Dutch institutional investor plan B.

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:

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.

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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.

Plan B responded to Buterin’s criticism, saying “people are looking for scapegoats for their failed projects or bad investment decisions.”

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.

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.