Bitcoin Stock-to-Flow Model and Its Proponents Under Fire Again as Failure Becomes Obvious

Bitcoin’s (BTC) stock-to-flow (S2F) model created by pseudonymous analyst PlanB is once again facing scrutiny from the cryptocurrency community, having completely failed its price prediction so far this year.

Based on the original S2F model and feedback from PlanB, which now has 1.8 million Twitter followers, BTC was expected to reach a price point of at least $ 98,000 in November last year. When that didn’t happen, PlanB came out with another prediction, saying instead that BTC will have “an average price over this halving cycle” of at least $ 100,000.

If this does not happen, “S2F fails”, wrote PlanB at the time.

Now, more than six months later, BTC is trading at around $ 20,000 as we are in the middle of Bitcoin’s next halving.

Failed predictions from Bitcoin’s third halving in May 2020 have already prompted PlanB to develop a new S2F model. This new model was shared in a tweet by the analyst on Monday this week, in which PlanB also said that BTC is now “grossly undervalued and will recover soon” or that the model “will be less useful in the future”.

On Tuesday, several prominent voices in the cryptocurrency community gave their two votes: Ethereum (ETH) co-founder Vitalik Buterin, for example, said that the stock-to-flow model “is really not working well right now.”

“I know it’s rude to brag and all that, but I think financial models that give people a false sense of certainty and predestination that the number will go up are harmful and deserve all the ridicule they get,” Buterin said.

PlanB was quick to respond to Buterin, saying that some people are “looking for scapegoats for their failed projects or bad investment decisions” and that even “leaders” within the community can play the victims, not just newcomers.

Others joined the discussion, with S2F critic Eric Wall, chief investment officer at crypto hedge fund Arcane Assets, posting a lengthy Twitter thread in which he shared his take on the situation.

Among other things, Wall said that “quacks” can easily create multiple anonymous online identities in which they each create a bitcoin pricing model, writing:

“Make 5, or why not 10 identities, maybe one will be correct. It’s Disneyland for charlatans.”

Wall once again mentioned the Bitcoin Rainbow Chart, a pattern he says “worked exactly like S2F even while S2F was running.”

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