PlanB and His Bitcoin Predictions: Is the Stock-to-Flow Model a Golden Compass or a Fool's Errand?

Bitcoin’s current spot trading price on Gate is approximately $90,083.7747. Although it has retreated from its all-time high, it remains firmly above a key long-term support level.

This somewhat echoes the predictions made by anonymous analyst PlanB in 2019 with the Stock-to-Flow (S2F) model. The model views Bitcoin as digital gold, attempting to estimate its fair value based on the scarcity created by its programmed halving events. The model predicts that Bitcoin’s peak price in this cycle could reach $222,000, while more aggressive market analyses, based on institutional adoption and macroeconomic conditions, even suggest long-term targets of $250,000 to $500,000.

Decoding the S2F Model

PlanB’s Stock-to-Flow model is essentially a valuation framework that attempts to quantify scarcity and link it to value. Its core formula is very simple: S2F ratio = Asset stock / Annual production. Here, “stock” refers to the total amount of Bitcoin currently issued and circulating, while “flow” refers to the number of new Bitcoins mined annually. The higher the ratio, the greater the stock relative to new supply, and the more scarce the asset is considered.

Bitcoin’s design makes this model seamless. Approximately every four years, mining rewards are halved, causing a sudden reduction in “flow.” With stock steadily increasing, the stepwise decrease in flow results in a jump in the S2F ratio.

PlanB’s historical data fitting reveals a significant correlation between Bitcoin’s market price and its S2F ratio. Based on this relationship, he created the famous chart predicting Bitcoin’s long-term price trajectory.

The Charm and Followers of the Model

The S2F model has quickly gained popularity in the crypto community due to several advantages that resonate with investors’ psychology. It simplifies complex market forecasts into a clear narrative based on a deterministic event (halving). For long-term holders, the model provides a strong psychological anchor and theoretical basis. It emphasizes Bitcoin’s fundamental, non-replicable features: absolute scarcity, predictable issuance, and decentralization.

During the 2020-2024 cycle, Bitcoin’s price trajectory has often approached the model’s predicted line, which has contributed to its reputation and historical credibility. This has led many investors to believe that it at least reveals the intrinsic logic behind Bitcoin’s long-term value growth.

Sharp Criticisms That Cannot Be Ignored

As the market evolves, especially after 2023 with the approval of spot Bitcoin ETFs and the influx of institutional capital, skepticism towards the S2F model has grown. The core criticism is that it is a purely “supply-side model” that completely ignores demand-side changes. André Dragosch, head of European research at Bitwise, pointed out that the current institutional demand generated through ETFs and other tools exceeds the annualized supply reduction caused by the last halving by more than seven times. This unprecedented demand shock cannot be captured by the original model.

The model assumes that the narrative of Bitcoin as a store of value always holds and that market demand will grow steadily. However, it cannot price in macroeconomic recessions, regulatory black swan events, or disruptive technological competition.

Market Pressure Testing the Model

The current state of the Bitcoin market provides a real-time case to test the applicability of the S2F model. On one hand, Bitcoin’s price experienced volatility around 2025 and has entered a consolidation phase between $85,000 and $92,000. On the other hand, on-chain data shows that despite the price consolidation, long-term holders continue to accumulate, and institutional holdings via ETFs have surpassed one million coins, creating a structural demand foundation.

This reveals a new reality: price-driving factors have diversified. While scarcity (supply) remains fundamental, institutional capital flows, global liquidity cycles, and regulatory clarity (demand side) are playing increasingly important roles.

Relying solely on the S2F model may cause one to overlook these key signals. For example, when prices temporarily dip below the model’s predicted line, it cannot explain whether this is due to short-term liquidity crunches, leverage liquidations, or fundamental shifts in narrative.

Building a Comprehensive Analysis Strategy Beyond S2F on Gate

For traders and investors on Gate, a wiser approach is to treat the S2F model as an important tool in the toolbox rather than the sole navigation instrument. A robust analysis framework should be multi-layered and multi-dimensional.

First, respect but do not blindly follow the model. Pay attention to the long-term trend after each halving, using it as a background reference for long-term position management, but never base short-term trades solely on it.

Second, establish a demand-side dashboard. Closely monitor relevant data and information provided on Gate, including but not limited to: daily net inflow/outflow of Bitcoin ETFs, whale wallet holdings changes, and the overall market cap of stablecoins.

Finally, incorporate macro and technical validation. Combine macro factors such as central bank monetary policy expectations and USD index strength with on-chain technical indicators (like MVRV, NUPL) and key support/resistance levels on Gate’s market page.

The table below summarizes how to integrate the S2F model with new market realities:

Institutional Demand

Today, the purchasing power brought by institutions through spot Bitcoin ETFs and similar products has become a force comparable to halving. It is reshaping the underlying valuation logic of Bitcoin. The market has entered a new phase where “scarcity as the base, demand as the wings.” PlanB’s model has successfully popularized the scarcity narrative of Bitcoin, laying the first theoretical cornerstone for this grand financial experiment.

What investors need to do now is to build their own analytical edifice on this foundation, using richer, more timely data and more open-minded thinking. After all, in a market driven by code, human nature, and capital, the only constant is change itself.