A valuation model that prices Bitcoin based on its scarcity by dividing the existing supply (stock) by the annual production (flow). The model, popularized by analyst PlanB, suggests Bitcoin's price should increase after each halving as the flow is reduced.
A valuation model that prices Bitcoin based on its scarcity by dividing the existing supply (stock) by the annual production (flow). The model, popularized by analyst PlanB, suggests Bitcoin's price should increase after each halving as the flow is reduced.
The Stock-to-Flow (S2F) model, introduced by pseudonymous analyst PlanB in 2019, applies a scarcity-based valuation framework to Bitcoin. "Stock" is the total existing supply (~19.7 million BTC), and "flow" is the annual new production (~164,250 BTC per year at 3.125 BTC/block). The ratio between them quantifies scarcity — a higher ratio means scarcer. Gold has a S2F of roughly 60 (it would take 60 years of current production to double the existing stock). After the 2024 halving, Bitcoin's S2F is approximately 120, making it twice as scarce as gold by this measure.
PlanB's original model used a logarithmic regression between Bitcoin's S2F ratio and its market value, observing a strong historical correlation. Each halving doubles the S2F ratio (by cutting flow in half), and the model predicted price increases of roughly one order of magnitude per halving. The model correctly anticipated the general trajectory of Bitcoin's price through several cycles.
However, the Stock-to-Flow model has faced significant criticism. Statisticians have pointed out issues with the regression methodology, noting that the apparent fit may be an artifact of modeling two non-stationary time series. The model's price predictions for the 2021 cycle ($100,000+) overshot actual prices, and its rigid predictions leave no room for demand-side factors, regulatory changes, or market structure evolution. Most analysts now view S2F as useful for understanding Bitcoin's supply dynamics but insufficient as a standalone price prediction model.
After the April 2024 halving (block reward reduced to 3.125 BTC), Bitcoin's Stock-to-Flow ratio is approximately 120. This means it would take 120 years of current production to double the existing supply. For comparison, gold's S2F is roughly 60 and silver's is around 20. By this measure, Bitcoin is now the scarcest monetary asset ever created.
The model captured Bitcoin's general price trajectory through its first three halving cycles but has limitations. Its 2021 cycle price prediction ($100,000+) was not reached during that cycle. Critics argue that the strong historical fit may be a statistical artifact and that the model ignores demand-side factors entirely. It is best understood as one lens among many — useful for framing Bitcoin's supply scarcity but not as a precise prediction tool.
Stock-to-Flow prices Bitcoin based on supply scarcity (the halving-driven ratio), while the Power Law model describes a time-based logarithmic growth trend. S2F predicts discrete price jumps after halvings, whereas the Power Law suggests continuous, decelerating growth over time with defined support and resistance bands. The Power Law has shown more consistent tracking of Bitcoin's actual price path and provides usable accumulation and distribution zones.