The Bitcoin stock-to-flow (S2F) model propounded by Plan B has continued to remain highly popular and controversial. Plan B has recently clarified a misconception the model suffers.
Bitcoin clarifies S2F model as critic calls the model “too bullish”
In a recent tweet, the pseudonym crypto market quant stated that the colors attached to the graphical representation of his S2F model were being misrepresented to have meaning. Following historical precedents, the price of Bitcoin crashed when the chart was in the green zone in the months to halving axis in 2014 and 2018.
This has made some market participants be expecting a Bitcoin market crash this year he observed; however, this is not the purpose of the S2F model.
Some people think that because bitcoin crashed on green in 2014 & 2018, BTC will crash again on green in 2022. But this could be coincidence… S2F says nothing about WHEN BTC pumps or crashes, Plan B wrote.
Meanwhile, the S2F model continues to face strong criticism. Today, Harold Christopher Burger, a software engineer and empiricist, guest authored an article in Bitcoin Magazine that called Plan B’s Bitcoin S2F model too bullish. Despite noting that the model received unfair dismissals, Burger said the model will fail.
I am highly confident that the S2F model will fail to predict bitcoin’s price adequately, but my main argument is simply that the shape of the S2F price forecasts is incorrect and too bullish,” Burger said.
This is because the model forecasts “non-diminishing growth” for the price of Bitcoin. In reality, the Bitcoin market already strongly hints at diminishing growth.
However, Burger is also highly bullish on Bitcoin. He points out that he has predicted that the price of Bitcoin to have brighter days. His thesis is a Bitcoin price of $100,000 no later than 2028 and $1 million no later than 2037. This is as opposed to the S2F model’s expectation of a ten-fold increase after every halving.
Is the S2F model too bullish?
This is not the first tongue lashing the S2F model has received. A Bitcoin Magazine piece from January asserted that the model misleading for investors and has flaws in its calculation. Notably, while Plan B has remained confident in the model’s approach, he has revealed that he could be wrong as well.
However, many other bullish models continue to float in the crypto market. The consensus of Bitcoin ardents is that the price will continue to surge to new benchmarks as Bitcoin adoption grows. Market participants including Antoni Trenchev, the founder of Nexo, expect the price of Bitcoin to reach $100k this year.
Bitcoin is currently trading at around $47,300, up 5.97% on the day. BTC reached an all-time high of just under $69,000 back in November 2021.