Despite its previous success, the stock-to-flow model attracted numerous opponents in the past year, given its failure to predict bitcoin’s price in 2022.
Its creator, though, remains a believer and outlined the possible scenarios in play for BTC for the next halving, which is supposed to take place in a year.
A lot has been said about the S2F model in the past several years, with most bitcoin maxis supporting it, given its bullish price predictions, while many others have criticized it in times of inaccuracy. It takes under consideration the stock as the size of existing reserves (or stockpiles) and the flow – the annual supply of bitcoins on the market.
The model had a good run for the first few years after PlanB laid it out, hitting several of its targets. However, it failed to come even close to reaching its most recent predictions, including surpassing the six-digit price tag by the end of last year, despite PlanB’s assertions.
The halving, the event that slashes BTC’s production by half approximately every four years (210,000 blocks), is an essential part of the model since it reduces the flow (annual supply). With the next one supposed to take place in roughly a year, according to current estimations, PlanB outlined where bitcoin will be in terms of USD price at that point.
He asserted that the asset will trade at around $60,000 (or more than 2x from its current price), and will keep going up after the fourth halving takes place.
PlanB also touched upon Metcalfe’s Law, which argues that the financial value or impact of a (telecoms) network is proportional to the number of connected and operating users, to substantiate its BTC price prediction. Although Metcalfe’s Law typically refers to a certain type of network, the Bitcoin blockchain also works as one, and it has been increasing in terms of active users and BTC holders.