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Few Bitcoin models have generated as much discussion — and as much controversy — as the Stock-to-Flow (S2F) model. Developed by the pseudonymous analyst PlanB in 2019, it became one of the most widely referenced Bitcoin price frameworks, accurately describing Bitcoin's historical price trajectory and generating bold predictions about its future.

Whether you consider it a reliable valuation model or a flawed extrapolation, understanding Stock-to-Flow is essential context for any serious Bitcoin investor. Here's what it is, why it captured the Bitcoin community's imagination, and how to think about it critically.

What Is the Stock-to-Flow Model?

Stock-to-Flow (S2F) is a scarcity metric originally used to evaluate precious metals like gold and silver. It measures the ratio of the total existing supply (stock) to the annual rate of new production (flow):

Stock-to-Flow = Total Existing Supply ÷ Annual New Production

A higher S2F ratio means the asset is scarcer relative to its new production — and historically, higher S2F has correlated with higher market value. Gold has an S2F of approximately 60–70 (it would take 60–70 years of current annual gold production to equal the existing above-ground stock). Silver has an S2F of around 20–25. Bitcoin's S2F ratio roughly doubles with each halving.

Bitcoin's Stock-to-Flow Across Halvings

What makes Bitcoin unique from a stock-to-flow perspective is that its supply schedule is entirely predictable and programmatically enforced. There's no discovery uncertainty (like with gold mining), no political risk, and no geological variability. The S2F ratio doubles approximately every four years.

Period	Block Reward	Approx. Annual New BTC	Approx. S2F Ratio
2009–2012 (pre-halving)	50 BTC	~2.6M BTC	~1–4
2012–2016 (1st halving era)	25 BTC	~1.3M BTC	~10
2016–2020 (2nd halving era)	12.5 BTC	~657K BTC	~25
2020–2024 (3rd halving era)	6.25 BTC	~328K BTC	~55
2024–2028 (4th halving era)	3.125 BTC	~164K BTC	~110+

After the 2024 halving, Bitcoin's stock-to-flow ratio exceeded gold's (approximately 60–70) for the first time in absolute terms. Bitcoin is now — by this measure — provably scarcer than gold in terms of new supply growth rate relative to existing supply.

The S2F Price Model

PlanB's original 2019 paper took the concept further: not just calculating S2F as a scarcity measure, but using it to model Bitcoin's price. The observation was that, historically, Bitcoin's market capitalization tracked closely with its stock-to-flow ratio on a log-log scale.

The S2F model fitted a power-law relationship between S2F and Bitcoin's market cap, then extrapolated forward. At publication (when S2F ≈ 25), the model suggested a price target of approximately $55,000–$100,000 for the 2020–2024 halving era. Bitcoin did reach $69,000 in November 2021 — briefly validating the model's range.

The S2F Cross Asset (S2FX) model, a later extension, mapped Bitcoin against gold and silver as comparable stores of value and projected even higher price targets for future cycles.

Historical Accuracy

Looking at Bitcoin's price relative to its S2F ratio across cycles:

• 2012–2013 cycle: Bitcoin's price surged and roughly tracked the S2F model's predicted range near the cycle peak.
• 2016–2017 cycle: The $20,000 peak aligned with the S2F model's general price band for an S2F of ~25.
• 2020–2021 cycle: The $69,000 peak was within the S2F model's predicted range for an S2F of ~55, though the model's more aggressive targets ($100,000–$288,000) were not reached.

The model correctly identified a log-log linear relationship between scarcity and price. Where it struggled was in the precision of its cycle-level price predictions — particularly the S2FX model's very high targets for 2021 that proved too optimistic.

Criticisms and Limitations

The Stock-to-Flow model has attracted significant criticism from economists and data scientists. Understanding these critiques helps you use S2F appropriately — as one lens among many, not a price oracle.

1. Unfalsifiable (in practice)

Critics argue the model has so many degrees of freedom that it can always be "explained" after the fact. The S2FX model in particular switched to a different formulation when the original S2F model's predictions diverged from price — which critics say is curve-fitting rather than predictive modeling.

2. Demand-side blindness

The S2F model focuses entirely on supply. But price is determined by both supply and demand. If demand collapses — due to regulatory crackdowns, competing technologies, or macro conditions — reduced new supply cannot prevent price from falling. The 2022 bear market (FTX collapse, crypto credit crisis) showed that demand shocks can overwhelm supply-side dynamics.

3. Statistical concerns

Several researchers (notably economist Stephan Livera and data scientist Nic Carter) have argued that the correlation PlanB found suffers from spurious regression — two independently trending series can appear correlated in a regression without any causal relationship. Both Bitcoin's price and S2F ratio trend upward over time, which can produce misleading correlation statistics.

4. Diminishing effect hypothesis

As Bitcoin's existing supply grows relative to new issuance, each halving's relative supply reduction becomes smaller in absolute terms. The argument that each successive halving should produce proportionally similar price increases becomes harder to sustain as Bitcoin matures.

What S2F Gets Right (Even If Imperfect)

Despite its limitations, the stock-to-flow framework captures something real about Bitcoin:

• Scarcity is a real property of Bitcoin. The 21 million hard cap, enforced by protocol consensus, means Bitcoin's stock-to-flow ratio will continue rising forever — unlike gold, which can respond to price increases with increased mining.
• Halvings create real supply shocks. Reducing new supply by 50% while demand remains constant or grows is a straightforward supply-demand dynamic that has preceded every bull market to date.
• Long-term price trend is upward. Whatever you think about specific price targets, the S2F model's core observation — that Bitcoin's programmatic scarcity increases over time and that price has historically reflected this — is difficult to dispute over multi-year timescales.

How to Use Stock-to-Flow in Practice

The practical value of S2F for investors is not as a price predictor but as a framing tool:

• Context for cycle position. Knowing that we've recently crossed S2F ~110 (post-2024 halving) — exceeding gold's historical S2F — provides context for why Bitcoin's long-term value proposition as a store of value is strengthening.
• Perspective on bear markets. When Bitcoin trades well below its S2F model price, it may indicate undervaluation relative to scarcity fundamentals. When it trades far above, it may indicate speculative excess — similar to how the Mayer Multiple uses the 200DMA as a baseline.
• Complement to on-chain indicators. S2F provides structural context; on-chain indicators like MVRV Z-Score and NUPL provide real-time sentiment and valuation signals.

Stock-to-Flow and Other Bitcoin Indicators

No single model should drive investment decisions. The most robust approach combines S2F context with actual on-chain measurement:

• Puell Multiple — directly measures the economic reality that S2F models theoretically: miner revenue relative to its annual average. Post-halving Puell Multiple lows confirm the supply shock S2F predicts.
• MVRV Z-Score — measures whether Bitcoin is over or undervalued relative to its realized (on-chain cost basis) value. High MVRV confirms excessive speculation; low MVRV confirms undervaluation.
• Mayer Multiple — price relative to 200DMA. Provides a technical baseline for identifying when price has moved too far from its trend.
• Halving cycle position — knowing where we are in the four-year cycle contextualizes all other indicators.

The NakamotoNotes Bitcoin Barometer synthesizes the on-chain and behavioral indicators that are most operationally useful — giving you a daily cycle signal without requiring you to interpret S2F model bands manually.

Frequently Asked Questions

Is the Stock-to-Flow model still valid?

Its specific price targets have underperformed in recent cycles. Its underlying insight — that Bitcoin's scarcity increases predictably with each halving — remains sound. Use it as a structural framework, not a price target generator.

What is the S2F model's price target for 2025–2028?

With Bitcoin's S2F now above 110, the original model's log-log relationship would project very high price targets. However, given the model's mixed track record on specific targets, treating these as definitive would be unwise. Use the targets as a rough upper bound for optimistic scenarios.

Who created the Stock-to-Flow model?

The Bitcoin S2F model was introduced by PlanB, a pseudonymous Dutch institutional investor, in a March 2019 Medium article titled "Modeling Bitcoin's Value with Scarcity." It drew on prior work applying S2F analysis to precious metals.

Does a higher S2F guarantee a higher Bitcoin price?

No. S2F models supply; price is determined by supply and demand together. A structural supply shock from a halving is necessary but not sufficient for a bull market — demand must also be present or growing.

Conclusion

The Bitcoin Stock-to-Flow model is one of the most influential analytical frameworks in Bitcoin's history — and one of the most debated. It correctly identifies that Bitcoin's scarcity increases predictably with each halving, and it showed a compelling historical relationship between scarcity and price. Where it falls short is in the precision of its future price predictions, which have proven more aspirational than accurate.

For investors, the most productive use of S2F is as contextual framing: understanding why Bitcoin's supply dynamics are structurally bullish over the long term, while relying on on-chain indicators like MVRV Z-Score, NUPL, Mayer Multiple, and the Puell Multiple for operationally useful cycle signals.

Track all major Bitcoin cycle indicators with NakamotoNotes.