Vitalik Buterin Claims BTC Stock-to-Flow Model is False

Ethereum co-founder Vitalik Buterin has renewed his attack on the stock-to-flow (S2F) price model for Bitcoin, dismissing it as “false”, “harmful” and “deserving of mockery”.

He went even further in echoing EthHub co-founder Anthony Sassano who, in a same-day tweet, damned S2F as an “epic failure”:

How the Stock-to-Flow Model Works

The S2F price model, authored by crypto analyst PlanB, predicts the future price of bitcoin based on its supply in circulation (stock) relative to the number of coins mined each year (flow), which decreases by half every four years. According to S2F predictions, 2022 would see bitcoin trading within the US$100,000-110,000 range, though the most recent market crash marked an 18-month low for BTC under US$20,000 last week, calling the model’s accuracy into question.

At that time, Buterin railed against “the ‘halvings cause BTC price rises’ theory”, implying that any price can be cited as evidence that the S2F model is correct.

S2F author PlanB countered Buterin in saying that the market’s slump made some people look for “scapegoats for their failed projects or wrong investment decisions”:

BTC vs S2F: Which Will Thrive to Survive?

In an earlier tweet, PlanB admitted that the model had enjoyed a “good run” for three years (until March 2022) but had since wobbled from its trajectory. As for the current market, PlanB considers that “either BTC is extremely undervalued and will bounce back soon, or S2F will be less useful in the future”.

Just last month, Buterin voiced his admiration for Bitcoin, saying he’d like to see Ethereum attain a similar level of stability. To do so, however, would require significant short-term change and instability – an apparent contradiction that has since come to pass.