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Despite its previous successes, the stock-to-flow (S2F) model has faced significant opposition over the past year, particularly after failing to accurately predict Bitcoin‘s price in 2022.
However, its creator, PlanB, remains a staunch believer in the model and has outlined potential scenarios for Bitcoin’s price leading up to the next halving, which is expected to occur in approximately one year.
S2F Model Targets $60,000 for BTC
The S2F model has been a subject of extensive discussion in recent years. While many Bitcoin maximalists support it due to its bullish price predictions, others have criticized it during periods of inaccuracy. The model calculates value based on the “stock,” representing existing reserves or stockpiles, and the “flow,” which denotes the annual supply of new bitcoins entering the market.
In the years following its introduction by PlanB, the model performed well, hitting several of its price targets. However, it failed to align with its most recent predictions, notably missing the mark on forecasts that Bitcoin would exceed six figures by the end of last year, despite PlanB’s assertions.
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The halving event, which reduces Bitcoin’s block reward by half approximately every four years (every 210,000 blocks), is a critical component of the model as it decreases the annual supply flow. With the next halving estimated to occur in roughly a year, PlanB has projected Bitcoin’s USD price at that time.
He asserted that Bitcoin will trade at approximately $60,000, representing more than a 2x increase from its current price, and is expected to continue rising following the fourth halving.
Bitcoin and Metcalfe’s Law
PlanB also referenced Metcalfe’s Law to substantiate his Bitcoin price prediction. This principle posits that the value or impact of a telecommunications network is proportional to the number of connected and active users. Although typically applied to telecom networks, the Bitcoin blockchain functions similarly, with both active users and Bitcoin holders increasing over time.
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