Stock-to-flow (S2F) is not a Bitcoin-specific concept. It originated in commodity markets as a way to measure the scarcity of physical assets like gold and silver. In 2019, an anonymous analyst who went by PlanB applied it to Bitcoin and the model became one of the most shared frameworks in the Bitcoin community.
The basic idea
Stock-to-flow measures the ratio of an asset’s existing supply (the stock) to how much new supply is produced each year (the flow). A high ratio means scarcity: lots of the asset exists, but not much new is being created, so the existing supply won’t be quickly diluted.
How different assets compare
After each halving, Bitcoin’s S2F ratio roughly doubles, because the flow (new bitcoin created per year) is cut in half while the stock (all existing bitcoin) continues to grow. This is by design — Bitcoin’s supply schedule makes it progressively harder to produce new bitcoin, while the existing supply grows only slowly.
PlanB’s model and its predictions
In March 2019, PlanB published a paper claiming a statistically significant relationship between Bitcoin’s S2F ratio and its market capitalization. The model predicted that as the S2F ratio rose after each halving, Bitcoin’s price would rise proportionally. The post-2020 halving model predicted Bitcoin reaching $100,000 — which happened in 2024. An extended “S2F Cross” model predicted $288,000 by December 2021. Bitcoin reached approximately $69,000 that month.
The model has been both celebrated and criticized in roughly equal measure since then.
The honest critique
Legitimate criticisms of S2F
- Demand is not modeled. Scarcity alone doesn’t determine price. Demand matters equally. An asset can be perfectly scarce and worthless if nobody wants it. S2F only models the supply side.
- The correlation may be coincidental. Statisticians have pointed out that two independently trending variables will often show a high correlation, without one causing the other. Bitcoin’s price and its S2F ratio have both trended upward — but that doesn’t mean the ratio drives the price.
- The model broke down in 2021. S2F Cross predicted prices between $100,000 and $288,000 for late 2021. Bitcoin reached $69,000. PlanB defended the model; critics said it had been falsified.
- It doesn’t account for external factors. Regulation, macroeconomic conditions, competing assets, and market sentiment are not in the model. These drove significant price movements the model didn’t predict.
What remains useful about it
Even if S2F is not a reliable price prediction tool — and the evidence suggests it isn’t — the underlying insight remains valid: Bitcoin’s supply schedule makes it more scarce over time, and scarcity is a necessary (though not sufficient) condition for a store of value.
The model helped a large audience understand the halving mechanic and Bitcoin’s designed scarcity in quantitative terms. That educational contribution was real, even if the specific price predictions overpromised.
Stock-to-flow is a useful framework for thinking about Bitcoin’s scarcity relative to gold and silver. It is not a reliable price prediction tool. Bitcoin becomes more scarce with each halving — that is true and important. Exactly what price that scarcity produces and when is not something any model has reliably predicted. ₿
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