Bitcoin Stock to Flow Model: Does It Work in 2025?

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The Bitcoin Stock to Flow (S2F) model remains one of the most discussed quantitative frameworks for predicting BTC’s long-term price trajectory. Originally introduced in 2019, it attempts to apply economic principles of scarcity—commonly used for precious metals like gold—to the world’s first decentralized digital currency. With Bitcoin’s next halving event expected in 2024 and market speculation building toward 2025, investors are revisiting whether the S2F model still holds predictive power.

This article explores the mechanics, historical performance, limitations, and evolution of the Bitcoin Stock to Flow model. We’ll also examine its updated version—the S2FX (cross-asset) model—and assess its relevance amid evolving market dynamics.

What Is the Stock to Flow Model?

The stock to flow (SF) ratio measures an asset’s scarcity by comparing its existing supply ("stock") to the new supply produced annually ("flow"). The formula is simple:

SF = Stock / Flow

For example, if there are 19 million Bitcoins in circulation and miners produce 300,000 per year, the SF ratio is approximately 63.3. A higher ratio indicates greater scarcity.

This concept is traditionally applied to commodities like gold and silver, which have high stock-to-flow ratios due to limited annual mining output. In contrast, consumable resources like oil or copper have low SF ratios because they are produced in large volumes annually.

Bitcoin mimics this scarcity through its fixed supply cap of 21 million coins and programmed halving events every four years, which cut mining rewards in half. These halvings reduce the "flow" of new supply, increasing the SF ratio over time.

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PlanB, a pseudonymous Dutch investor, popularized this model in a 2019 Medium article titled "Modeling Bitcoin Value with Scarcity." He proposed that Bitcoin’s market value correlates with its SF ratio via a power law relationship, meaning that as scarcity increases, price grows exponentially.

According to his analysis, each halving event historically triggered a ~10x increase in BTC’s price within 12–18 months post-halving. This pattern formed the basis of long-term forecasts extending into 2025 and beyond.

Historical Performance of Bitcoin’s S2F Model

Since its introduction, the S2F model has drawn both acclaim and skepticism. Between 2019 and early 2021, Bitcoin’s price closely followed the model’s projected growth curve during the bull run following the 2020 halving.

The model uses a logarithmic chart, plotting Bitcoin’s historical price against its rising SF ratio over time (from 2010 to 2026). On this chart, two lines are typically visible:

When the market price trades below the S2F prediction line, the asset is considered undervalued; when above, it may be overvalued.

This led to the development of a secondary metric: Stock-to-Flow Deflection (S2F-D), calculated as:

S2F-D = Market Price / Predicted Price

An S2F-D value below 1 suggests undervaluation; above 1 suggests overvaluation. Traders have used this as a signal for buying dips or taking profits.

However, deviations exist. Notably:

By late 2023, Bitcoin was trading around $43,000—well below PlanB’s forecast of $100,000+—raising questions about the model’s continued accuracy.

Has the Bitcoin S2F Model Been Invalidated?

Critics argue that while the S2F model performed well during earlier cycles, it fails to account for market sentiment, regulatory shifts, macroeconomic conditions, and adoption trends—factors increasingly influential in crypto markets.

In June 2022, PlanB predicted Bitcoin could reach $450,000 by year-end 2023, with a floor of $135,000 even in worst-case scenarios. Neither target materialized. As of December 2023, BTC hovered near $43,000, and market cap stood at $842 billion—up from $650 billion in July but still far from projections.

Yet dismissal may be premature. Financial models based on historical data often struggle during structural market shifts. The S2F model doesn’t incorporate external shocks like:

Moreover, PlanB himself acknowledged uncertainty through a Twitter poll in mid-2022: 41% of respondents believed BTC would stay under $100,000 that year—a sharp rise from 16% just months earlier.

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Still, Bitcoin has rebounded since mid-2023, driven by growing institutional interest and anticipation of spot ETF approvals. This resilience suggests that while timing may be off, the underlying thesis—scarcity drives value—remains compelling.

The Evolution: Bitcoin S2F Cross-Asset (S2FX) Model

Recognizing limitations in the original model, PlanB introduced an enhanced framework in April 2020: the Bitcoin Stock-to-Flow Cross-Asset (S2FX) model.

This version removes time as a direct variable and integrates other scarce assets like gold and silver into a unified valuation model. It treats Bitcoin as progressing through “phase transitions” similar to physical materials—evolving from speculative asset to digital gold.

Key features:

In essence, S2FX positions Bitcoin not just as a cryptocurrency but as a global store of value competing directly with traditional safe-haven assets.

Frequently Asked Questions

Q: Who created the Bitcoin Stock to Flow model?
A: The model was developed by “PlanB,” a pseudonymous Dutch investor and analyst, in March 2019.

Q: How does the Stock to Flow model predict Bitcoin’s price?
A: It evaluates scarcity by dividing total circulating supply (stock) by annual new supply (flow). As halvings reduce flow, the rising SF ratio correlates with exponential price growth based on historical trends.

Q: Is the S2F model accurate?
A: Historically, it aligned closely with BTC’s price movements between 2011 and 2021. However, recent deviations highlight its limitations in capturing real-time market dynamics beyond supply scarcity.

Q: What is the S2FX model?
A: An upgraded version of S2F that includes gold and silver in the valuation framework, aiming for cross-asset consistency and removing time-based assumptions.

Q: Can I use S2F for investment decisions?
A: While useful as a long-term reference, it should be combined with technical analysis, macro trends, and risk management strategies—not used in isolation.

Q: Does the model predict a $1 million Bitcoin?
A: Yes, early S2F projections suggested BTC could surpass $1 million by 2025. However, current market conditions suggest this timeline may be extended depending on adoption and macro factors.

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Final Thoughts

The Bitcoin Stock to Flow model offers a compelling narrative: scarcity breeds value. While it lacks granularity in addressing short-term volatility or external shocks, its core insight—that predictable supply constraints influence long-term pricing—remains influential.

As we approach 2025 and another halving cycle concludes, investors should view S2F not as a crystal ball but as one tool among many. When combined with on-chain metrics, macroeconomic indicators, and adoption trends, it can help form a more complete picture of Bitcoin’s potential trajectory.

Whether or not BTC hits six figures—or even seven—by 2025 may depend less on formulas and more on real-world utility, regulatory clarity, and global financial shifts. But one thing is certain: the conversation around scarcity, supply, and digital value isn’t going away.

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