Model stock-to-flow di BTC gained a lot of attention during the bull run, since hit several price predictions; however, even during the bull market the pattern diverged on several occasions.
Buterin joined the growing list of model critics aiming to predict the price of BTC:
Stock-to-flow isn’t doing well at all right now.
I know it’s rude to gloat and all, but I believe financial models that give people a false sense of certainty and predestination that the numbers keep going up are harmful and deserve all the mockery they get.
Stock-to-flow is really not looking good now.
I know it’s impolite to gloat and all that, but I think financial models that give people a false sense of certainty and predestination that number-will-go-up are harmful and deserve all the mockery they get. https://t.co/hOzHjVb1oq pic.twitter.com/glMKQDfSbU
— vitalik.eth (@VitalikButerin) June 21, 2022
The S2F model quantifies the price of an asset based on its scarcity and has been used mainly for precious metals such as gold and silver. PlanB’s popular S2F model suggests that BTC’s price will continue a steady and impressive upward path with returns roughly tenfold every four years.
Il critical problem of the S2F model, highlighted by many, is the one-sided estimate, which takes into consideration only the supply side of BTC and assumes that demand continues to grow.
Related: Vitalik Buterin explains some possible non-financial uses of the blockchain
While demand for BTC has shown significant growth, other factors, such as inflation favored by the Fed’s money press, have significantly influenced the purchasing power of consumers. Therefore, the S2F model does not take into account several macroeconomic factors that mainly affect market sentiment.
Correct, the model only takes into account the scarcity / s2f ratio, which is the only input of the model. Everything else, demand, macro, crypto, covid, war, etc … causes deviations. The model is VERY rough. Also, the current extreme macro context causes all parameters (rsi, 200wma etc.) to show extreme values.
Correct, the model only accounts for scarcity/s2f-ratio, that is the only model input. All the rest, demand, macro, crypto, covid, war etc, causes deviation. The model is VERY rough. Also, current extreme macro backdrop causes all metrics (rsi, 200wma etc) to show extreme values.
— PlanB (@100trillionUSD) June 20, 2022
Plan B responded to Buterin’s criticism by claiming that “people are looking for scapegoats for their failed projects or bad investment decisions.”
After a crash, some people look for scapegoats for their failed projects or bad investment decisions. Not only newbies, but also “leaders” are liable to blame others and to make victims. Remember those who blame others after a breakdown and those who stand up for themselves.
After a crash aome people are looking for scapegoats for their failed projects or wrong investment decisions. Not only newbies but als “leaders” fall victim to blaming others and playing the victim. Remember those who blame others and those who stand strong after a crash. https://t.co/4nJdHq84pm
— PlanB (@100trillionUSD) June 21, 2022
According to the S2F model, BTC should have reached $ 100,000 by the end of December 2021. While having admitted in the past that there would have been some anomalies due to exogenous factors, the model’s popularity during the peak of the bull run has dropped most of the criticism.
We’ll know by the end of 2021: S2F predicts that btc must have exceeded $ 50,000 (even $ 100,000 if using the new model), while Dave’s model is under $ 30,000. Furthermore, Dave expects the next top at $ 81,000, while the S2F indicates a multiple (3x) of $ 50-100,000.
We will know by end 2021: S2F predicts btc has to have been over $50k (even $100k if you use the new model), where Dave’s model is below $30k. Also Dave predicts next top at $81k, where S2F points at a (3x) multiple of $50-100k.https://t.co/yQk6GZvTdb
— PlanB (@100trillionUSD) September 3, 2019
The debate on flawed financial models comes at a time when BTC hits a new four-year low at $ 17,748. At the time of writing, the price of the major cryptocurrency is trading at $ 21,145, recording a 4% increase in the past 24 hours.
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