What is the Bitcoin Stock-to-Flow Model? S2F and Price Trends Explained

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The Bitcoin stock-to-flow (S2F) model has become one of the most discussed frameworks in the world of cryptocurrency investing. Designed to forecast BTC’s future price based on its scarcity, the model draws parallels between digital gold and traditional precious metals like gold and silver. But how accurate is it? And should investors rely on it when making decisions?

In this comprehensive guide, we’ll break down what the Bitcoin stock-to-flow model is, how it works, its historical accuracy, and why it continues to spark debate among analysts and traders.

Understanding the Bitcoin Stock-to-Flow Model

The Bitcoin stock-to-flow model is a valuation framework that attempts to predict the price of Bitcoin by measuring its scarcity. It does so by comparing the current circulating supply ("stock") with the amount of new coins produced annually ("flow"). The resulting stock-to-flow ratio (S2F) serves as an indicator of how scarce an asset is—and historically, scarcity correlates with higher value.

This concept isn’t new. Economists have long used the stock-to-flow model to evaluate commodities such as gold, silver, and platinum. Gold, for instance, has a high S2F ratio because its existing reserves far exceed annual mining output—making it resistant to inflation and devaluation.

Bitcoin mimics this behavior through its fixed supply cap of 21 million coins and a built-in scarcity mechanism known as the halving event, which occurs roughly every four years. During each halving, the block reward given to miners is cut in half, reducing the rate at which new bitcoins enter circulation.

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Because Bitcoin’s issuance schedule is transparent and predictable, proponents argue that the S2F model offers a data-driven way to estimate its long-term price trajectory.

How Is the Bitcoin Stock-to-Flow Ratio Calculated?

To calculate the stock-to-flow ratio, use the following formula:

S2F = Current Circulating Supply / Annual New Supply

As of now, Bitcoin’s circulating supply stands at approximately 19.81 million BTC. With a block reward of 3.125 BTC per block and about 144 blocks mined per day, the annual production (flow) comes out to roughly 164,250 BTC.

Using the formula:

19,810,000 ÷ 164,250 ≈ 120.6

This gives Bitcoin a current S2F ratio of around 120.6, surpassing even gold’s estimated ratio of about 60—making BTC one of the most scarce assets in existence.

Each halving event reduces the flow component of this equation, thereby increasing the S2F ratio over time. For example:

As the flow slows and scarcity intensifies, the model suggests that price should rise proportionally—assuming demand remains constant or increases.

Historical Performance of the S2F Model

The Bitcoin stock-to-flow model gained widespread attention after it successfully predicted BTC’s surge following the 2016 and 2020 halvings. Notably, after the May 2020 halving, Bitcoin reached around $55,000, closely aligning with the model’s projection.

However, the model faced criticism in 2022 when Bitcoin peaked at only $30,000** instead of the projected **$100,000. This deviation highlighted a key limitation: while supply is predictable, demand is not.

External factors such as macroeconomic conditions, regulatory changes, market sentiment, and institutional adoption play significant roles in price movements—none of which are accounted for in the basic S2F framework.

Despite these shortcomings, renewed interest emerged in late 2024 when Plan B—the pseudonymous creator of the model—shared updated projections suggesting aggressive growth through 2025:

While speculative, these forecasts reignited discussions about whether Bitcoin could follow a supercycle driven by structural scarcity.

Common Criticisms of the Stock-to-Flow Model

Despite its popularity, the S2F model faces valid critiques from economists and crypto analysts alike.

Overemphasis on Supply

The model focuses almost exclusively on supply dynamics while largely ignoring demand-side variables such as:

These factors can significantly influence price regardless of scarcity metrics.

Lack of Fundamental Valuation

Unlike traditional assets evaluated using cash flows or utility-based models, Bitcoin’s value under S2F is derived purely from scarcity—not usage or network effects. Critics argue that without widespread real-world utility, price may decouple from theoretical models.

Past Accuracy ≠ Future Performance

Just because the model aligned with price movements in previous cycles doesn’t guarantee future accuracy. Markets evolve, and new variables (like centralized regulations or geopolitical risks) can disrupt historical patterns.

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Frequently Asked Questions (FAQs)

Is the Bitcoin Stock-to-Flow Model Accurate?

The model has shown predictive power in past bull runs, particularly after the 2016 and 2020 halvings. However, it failed to anticipate Bitcoin’s underperformance in 2022, indicating limitations in volatile or externally influenced markets.

Who Created the Bitcoin Stock-to-Flow Model?

The model was introduced in March 2019 by a pseudonymous analyst known as Plan B, a former institutional investor turned Bitcoin advocate.

Does Bitcoin Still Follow the Stock-to-Flow Ratio?

Currently, Bitcoin’s market price deviates from the trajectory suggested by the S2F model. While scarcity remains a strong foundational trait, other forces like macroeconomic pressures and regulatory uncertainty have caused divergence.

What Is a Good Stock-to-Flow Ratio?

Generally, a higher ratio indicates greater scarcity and potential long-term value. Gold sits around 60; Bitcoin now exceeds 120—suggesting stronger scarcity dynamics than most traditional assets.

How Often Does Bitcoin’s Stock-to-Flow Ratio Increase?

The ratio increases approximately every four years during the halving event, when mining rewards are reduced by 50%. This gradual reduction ensures a deflationary supply schedule until all 21 million BTC are mined.

Can the Stock-to-Flow Model Predict All Market Movements?

No. While useful for understanding long-term scarcity trends, the model doesn’t account for short-term volatility driven by news, regulations, hacks, or macroeconomic shifts.

Final Thoughts: A Tool Among Many

The Bitcoin stock-to-flow model offers a compelling narrative: scarcity breeds value. By framing Bitcoin as “digital gold,” it provides investors with a simple yet powerful mental model for thinking about long-term appreciation.

However, it should not be used in isolation. Smart investors combine S2F insights with technical analysis, on-chain metrics, macroeconomic indicators, and adoption trends for a more holistic view.

As Bitcoin continues maturing as an asset class, models like S2F will remain valuable starting points—but not definitive answers.

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