Plan B's Stock to Flow (S2F) model is one of the most widely recognized and discussed frameworks for predicting Bitcoin's price. Originally applied to commodities like gold, this model measures scarcity by comparing the total existing supply (stock) against the annual production (flow). Its application to Bitcoin has sparked significant interest and debate within the crypto community.
In this article, we explore the fundamentals of the S2F model, its adaptation to Bitcoin (known as S2FX), the anonymous creator behind it, and the price predictions it has generated.
What Is the Stock to Flow Model?
The Stock to Flow model is a straightforward yet powerful concept. It calculates the ratio between the total available supply of an asset (stock) and the amount produced each year (flow). This ratio serves as a measure of scarcity—the higher the number, the scarcer the asset.
For example, gold has a total stock of approximately 212,000 tons and an annual flow of 3,000 tons. Dividing stock by flow gives a ratio of about 70, meaning it would take 70 years to produce the current stock at the present rate. A high Stock to Flow ratio indicates that an asset can better preserve its value over time due to limited new supply.
S2FX: Stock to Flow Cross Asset
Plan B adapted the traditional S2F model to Bitcoin, naming this version S2FX (Stock to Flow Cross Asset). Bitcoin’s predictable and transparent supply schedule makes it uniquely suited for this analysis.
At the time of writing, Bitcoin’s circulating supply is around 19.8 million coins, with approximately 164,000 new coins added annually. This results in a Stock to Flow ratio of about 60—similar to gold’s. However, Bitcoin’s periodic halving events reduce the flow of new coins by half approximately every four years, increasing its scarcity over time.
Unlike gold, where future production is uncertain, Bitcoin’s emission schedule is preprogrammed. The next halving is expected in spring 2028, allowing for long-term predictions based on known supply changes.
👉 Explore more about Bitcoin halvings
Who Is Plan B?
The identity of Plan B remains unknown. He is a Dutch institutional investor with over 25 years of experience in quantitative finance and a lifelong fascination with modeling and economic systems.
Previously active on X (formerly Twitter) under the username “100trillionUSD”—a reference to Zimbabwe’s hyperinflation era—Plan B has been inactive on the platform since 2021. His work focuses on applying rigorous financial models to Bitcoin, emphasizing its potential as a store of value.
What Are Plan B’s Bitcoin Price Predictions?
Plan B’s S2F model has generated some ambitious price forecasts for Bitcoin. According to the model, Bitcoin could reach around $400,000 by the end of 2024. Following the 2028 halving, the predicted price rises to $1 million per Bitcoin.
These projections are based on the increasing scarcity post-halving and the historical correlation between Bitcoin’s Stock to Flow ratio and its market value.
Frequently Asked Questions
What is the Stock to Flow ratio?
The Stock to Flow ratio measures an asset’s scarcity by dividing its total supply by annual production. A higher ratio indicates greater scarcity and potentially better value retention.
How does Bitcoin’s Stock to Flow compare to gold’s?
Bitcoin’s current ratio is around 60, similar to gold’s 70. However, Bitcoin’s ratio is expected to increase significantly after each halving event, making it increasingly scarce over time.
Why is Plan B’s model controversial?
While popular, the model is criticized for its reliance on historical data and assumptions that may not hold in changing market conditions. Some argue it oversimplifies Bitcoin’s value drivers.
What is a Bitcoin halving?
A halving is an event where Bitcoin’s block reward is cut in half, reducing the rate of new coin creation. This occurs approximately every four years and is designed to enforce scarcity.
Can the S2F model be used for other cryptocurrencies?
The model is most applicable to assets with predictable and limited supplies, like Bitcoin. It is less useful for cryptocurrencies with inflationary or unstable emission schedules.
How accurate have Plan B’s predictions been so far?
The model has seen both successes and deviations. While it broadly captured Bitcoin’s long-term appreciation, short-term price movements have sometimes diverged from predictions.
Conclusion
Plan B’s Stock to Flow model offers a compelling framework for understanding Bitcoin’s value proposition based on scarcity. While its predictions are optimistic, they highlight the importance of Bitcoin’s controlled supply and halving events. As with any model, it should be used as one of many tools for evaluation rather than a definitive guide.