Why Ethereum’s Inventor Attacked This Bitcoin Pricing Model

Inventor of Ethereum Vitalik Buterin take For the controversial Bitcoin price model Stock-To-Flow (S2F). Buterin argued that the model “doesn’t look good” and publicly criticized it for giving cryptocurrency investors a “false sense of certainty.”

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According to Buterin, this creates the illusion that Bitcoin will keep rising. This could cause many to lose their initial investment or more, as evidenced by recent price action. Buterin said via his Twitter account while showing the following chart:

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.

Inventory-to-Flow Model. Source: Vitalik Buterin on Twitter

As shown, the model, created by the pseudonymous analyst Plan B, predicts that the price of BTC will reach $100,000 by the end of 2021. As Bitcoin trended down later in the year, the model was skewed, and many saw it as a failure.

Critics, such as Vitalik Buterin, argue that the model does not take into account other key variables and only predicts the price of BTC as a future rise. For example, it failed to predict what would happen to Bitcoin under current economic conditions, reduced global liquidity and a rate hike by the Federal Reserve (Fed).

Comments on Buterin, Plan B, inventor of the S2F model Say:

After the debacle, some are looking for scapegoats for their failed projects or bad investment decisions. Not only newbies, but also “leaders” fall victim to blaming others and playing victims. Remember those who blame others and those who are strong after a car accident.

Bitcoin BTC BTCUSD
BTC price is trending lower on the 4-hours chart. resource: BTCUSD trading view

Is it possible to predict the price of Bitcoin?

Plan B has made changes to its S2F model and now refers to the 2019 original and the new S2F version. As you can see below, both versions predict an upward trend in the price of BTC in 2022 and the foreseeable future.

If BTC stays at current levels, around or below $20,000 in the coming months, analysts say the S2F model “will be less useful.” Another scenario is that Bitcoin is “extremely undervalued and will bounce back soon.”

Regarding the validity of S2F and any other model used to predict financial performance, Plan B stated:

Prediction is hard, especially the future. EMH even said that predicting financial markets is impossible.

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Later, as discussions around the S2F model heated up, Plan B Add to:

So I share my analysis and graphs for free. Never tell anyone what/when/how/how much to buy or buy. Now covid, china ban, russian war and inflation have put all assets including bitcoin in trouble… Somehow some people blame me for their investment decisions? lame.



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