What Is the Bitcoin Stock-to-Flow Model (And Does It Still Work)?

The stock-to-flow (S2F) model, popularized by the pseudonymous analyst PlanB starting in 2019, is a valuation framework originally used for scarce commodities like gold and silver, applied to Bitcoin based on its programmatically decreasing rate of new supply.

How the model works, conceptually

Stock-to-flow measures existing supply ("stock") against the rate of new production ("flow") — a higher ratio implies greater scarcity. Because each Bitcoin halving cuts the flow of new coins in half while the existing stock keeps growing, Bitcoin's stock-to-flow ratio mechanically increases with each halving, and the original model proposed that Bitcoin's price should track this ratio in a predictable mathematical relationship.

Where the model has faced criticism

The stock-to-flow model has drawn substantial criticism from economists and analysts on several grounds: it treats price as a function of supply scarcity alone, largely ignoring demand-side factors entirely; it fits historical data reasonably well in retrospect but has produced specific price predictions (including targets well above $100,000 for periods where Bitcoin traded far lower) that did not materialize on the model's original timeline; and critics have pointed out that a model based on a small number of historical data points (effectively one for each halving) risks overfitting a pattern that may not be causal.

Why it's still widely discussed despite the criticism

Even critics of the specific S2F model generally acknowledge the underlying logic — that reduced new supply matters for price, all else equal — as directionally reasonable, even if the specific mathematical relationship the model proposes has proven unreliable as a precise price predictor. It remains one of the most-cited (and most-debated) frameworks in Bitcoin market analysis.

This article is educational and does not constitute a price prediction or investment recommendation.