Vitalik Buterin Believes Bitcoin S2F Model Gives a False Sense of Certainty

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Vitalik Buterin, the co-founder of Ethereum, has recently criticized the controversial Bitcoin Stock-To-Flow (S2F) model that was popularized by PlanB, a pseudonymous Dutch institutional investor. This controversial Bitcoin S2F model garnered attention during BTC’s bull run, where it was spot on with several price predictions. However, the model also made some incorrect predictions a few times during the bull run. In a recent tweet on the popular social media platform Twitter, Buterin joined the list of people who have criticized the Bitcoin model that seems to predict the price of Bitcoin.

The S2F model quantifies an asset’s price based on its scarcity. It has been used to determine the price of popular metals like gold and silver. According to PlanB’s popularized BTC’s S2F model, BTC’s price will continue a steady and excellent path upward with around tenfold returns every four years. The main problem with this model is that critics have pointed out that it only considers Bitcoin’s supply while assuming that its demand will keep growing.

Although BTC’s demand has shown a major growth, factors such as inflation and the money printing spree embarked upon by the Feds have significantly affected the purchasing power of consumers. Hence, BTC’s S2F model fails to account for other macroeconomic factors that sometimes affect market conditions.

In response to Buterin’s criticism, PlanB hinted, “People are looking for scapegoats for their failed projects or wrong investment decisions.”

Going by the S2F model, BTC was predicted to reach the $100,000 mark by the end of December 2021. Although PlanB once admitted that the S2F prediction might not be entirely accurate due to flaws from external factors, the model’s popularity during Bitcoin’s peak bull trend made it difficult for most critics to hit.

The debate around this and other models comes when Bitcoin and other cryptocurrencies are experiencing a turbulent season. Bitcoin recorded a new four-year low this weekend after dropping to $17,748. At the time of writing this report, Bitcoin trades at $21,189.