PlanB's Price Predictor: Explaining the Bitcoin Stock-to-Flow Model

Cryptocurrency traders continuously seek reliable methods to predict market movements and make informed investment decisions. While no perfect crystal ball exists for forecasting digital asset prices, various analytical models have emerged to help traders evaluate Bitcoin's potential value. Among these tools, the Bitcoin Stock-to-Flow (S2F) model has gained significant attention since its introduction in 2019. This model attempts to predict Bitcoin's future price by analyzing its scarcity characteristics, similar to how precious metals are valued in traditional commodity markets.

What is the Bitcoin stock-to-flow model?

The Bitcoin Stock-to-Flow model represents a quantitative approach to forecasting BTC's future valuation based primarily on supply dynamics. The model was developed by pseudonymous analyst PlanB, who published the methodology in a 2019 Medium article titled "Modeling Bitcoin Value with Scarcity." The fundamental premise draws parallels between Bitcoin and scarce commodities like gold and silver.

In this framework, "stock" refers to the total existing supply of Bitcoin currently in circulation, while "flow" represents the rate at which new Bitcoin enters the market through mining activities. The S2F ratio is calculated by dividing the current stock by the annual flow. A higher ratio indicates greater scarcity relative to production, which theoretically correlates with higher market valuations.

Bitcoin's unique characteristic is its predetermined issuance schedule, which includes halving events approximately every four years. During these events, the mining reward is cut in half, effectively reducing the flow of new Bitcoin entering circulation. This predictable reduction in supply creates an increasingly higher S2F ratio over time, which according to PlanB's theory, should drive Bitcoin's price upward as scarcity increases.

How to read the Bitcoin stock-to-flow chart

The Bitcoin stock-to-flow chart created by PlanB has become widely accessible through various platforms including PlanB's social media channels and specialized cryptocurrency analytics websites like LookIntoBitcoin and CoinGlass. The visual representation uses a color-coded system to display both historical price data and projected valuations based on the S2F ratio.

The chart typically features Bitcoin's actual market price plotted as a line with colors that change based on proximity to the next halving event. Cooler colors like blue and purple indicate periods closest to a halving, while warmer colors such as red and orange represent times furthest from these supply shock events. The vertical axis displays the price in USD, while the bottom of the chart often shows the variance between the model's predicted price and Bitcoin's actual trading price.

Traders analyze these charts to identify patterns and deviations, looking for opportunities when Bitcoin's actual price significantly diverges from the Bitcoin stock-to-flow model's predictions. Historical analysis of these variances helps inform decisions about potential entry or exit points for trading positions.

Benefits of the Bitcoin stock-to-flow model

The Bitcoin stock-to-flow model developed by PlanB has gained widespread adoption in the cryptocurrency community due to several compelling advantages. Its accessibility, grounding in concrete fundamentals, and historical performance have made it a popular reference point for Bitcoin analysis.

One of the model's primary strengths is its simplicity and ease of understanding. Unlike complex financial models requiring advanced mathematical knowledge, the Bitcoin stock-to-flow framework distills Bitcoin's value proposition into a single, comprehensible metric. This accessibility has democratized Bitcoin valuation analysis, allowing both novice and experienced traders to engage with quantitative forecasting.

The model's focus on tangible fundamentals represents another significant advantage. Rather than relying on abstract theories or subjective valuations, PlanB's Bitcoin stock-to-flow model anchors its predictions in Bitcoin's verifiable tokenomics: the fixed supply cap of 21 million coins, the predetermined halving schedule, and the measurable scarcity that increases over time. These concrete data points provide a solid foundation for analysis.

Historically, the Bitcoin stock-to-flow model has demonstrated reasonable accuracy in capturing Bitcoin's long-term upward trajectory. While the model's predictions haven't perfectly aligned with actual prices, the variance typically remains within acceptable ranges. Since PlanB introduced the model in 2019, the core assumption that Bitcoin's price will appreciate due to increasing scarcity has proven generally accurate, lending credibility to the model's approach.

Finally, the Bitcoin stock-to-flow model serves as an effective long-term forecasting tool particularly suited for investors with extended time horizons. It provides a framework for understanding Bitcoin's value evolution across halving cycles, helping long-term holders identify potentially attractive accumulation periods and manage their positions strategically.

Criticisms of PlanB's stock-to-flow model

Despite its popularity, PlanB's Bitcoin stock-to-flow model faces legitimate criticism from various quarters of the cryptocurrency community. Understanding these limitations is essential for traders who wish to use the model responsibly as part of a broader analytical framework.

The most common criticism centers on the model's oversimplification of Bitcoin's value drivers. By focusing exclusively on supply dynamics, the Bitcoin stock-to-flow model ignores numerous factors that influence Bitcoin's price, including market sentiment, regulatory developments, technological upgrades, macroeconomic conditions, and adoption rates. Innovations such as the Lightning Network, SegWit, and Ordinals all impact Bitcoin's utility and value proposition, yet receive no consideration in PlanB's stock-to-flow framework.

Another significant concern involves the model's underlying assumption that Bitcoin functions primarily as digital gold. While this narrative has gained traction, it remains debatable whether Bitcoin's future lies solely in serving as a store of value or whether its utility as a medium of exchange, smart contract platform, or other applications will drive its valuation. The Bitcoin stock-to-flow model's commodity-centric approach may miss important developments in Bitcoin's evolving use cases.

The model also struggles to account for black swan events—unexpected occurrences that dramatically impact market dynamics. Major events such as regulatory crackdowns, major exchange platform failures, security breaches, or global economic crises can cause significant price movements that have nothing to do with Bitcoin's stock-to-flow ratio. The model's reliance on historical patterns and assumption of demand continuity make it vulnerable to these unpredictable shocks.

Lastly, PlanB's Bitcoin stock-to-flow model provides limited utility for short-term traders. Day traders and swing traders require responsive indicators that capture immediate price action and momentum, which the stock-to-flow model cannot provide. Its strength lies in long-term trend analysis across halving cycles, making it unsuitable for developing intraday or weekly trading strategies.

How to use Bitcoin stock-to-flow when trading crypto

For cryptocurrency traders seeking to incorporate PlanB's Bitcoin stock-to-flow model into their analytical toolkit, the key lies in understanding its appropriate application and limitations. The model serves best as one component of a comprehensive trading strategy rather than a standalone decision-making tool.

Traders typically reference the Bitcoin stock-to-flow model when analyzing Bitcoin's long-term price trajectory and historical patterns, particularly in relation to halving events. PlanB's model helps identify major trend directions and provides context for understanding Bitcoin's scarcity-driven value proposition. However, effective traders combine stock-to-flow analysis with multiple other analytical approaches.

A robust trading strategy incorporates technical analysis, including chart patterns, moving averages, support and resistance levels, and momentum indicators. Fundamental analysis should examine on-chain metrics such as hash rate, transaction volumes, and wallet activity. Macroeconomic factors including interest rates, inflation expectations, and regulatory developments also require consideration.

By integrating PlanB's Bitcoin stock-to-flow model with these diverse analytical methods, traders can develop a more nuanced understanding of market conditions. The Bitcoin stock-to-flow model provides valuable context about Bitcoin's long-term scarcity dynamics, while other tools offer insights into shorter-term price action, market sentiment, and immediate catalysts that might drive price movements independent of supply considerations.

Conclusion

The Bitcoin stock-to-flow model developed by PlanB represents a significant contribution to cryptocurrency market analysis, offering traders a quantitative framework for understanding Bitcoin's value in relation to its increasing scarcity. PlanB's Bitcoin stock-to-flow model has gained widespread recognition due to its simplicity, grounding in concrete tokenomics, and reasonable historical accuracy in capturing Bitcoin's long-term upward trajectory.

However, traders must recognize the Bitcoin stock-to-flow model's limitations. Its exclusive focus on supply dynamics overlooks numerous factors influencing Bitcoin's price, from technological developments to market sentiment and unexpected events. The model's assumption of Bitcoin as digital gold, while increasingly accepted, may not capture the full spectrum of Bitcoin's evolving utility and value propositions.

Ultimately, PlanB's Bitcoin stock-to-flow model functions most effectively as part of a comprehensive analytical approach. When combined with technical indicators, fundamental analysis, on-chain data, and macroeconomic insights, it provides valuable perspective on Bitcoin's long-term potential. Traders who understand both the Bitcoin stock-to-flow model's strengths and weaknesses can leverage it appropriately while avoiding over-reliance on any single analytical tool. Success in cryptocurrency trading requires continuous learning, diverse analytical methods, and recognition that no model can perfectly predict the complex dynamics of digital asset markets.

FAQ

What is Plan B's prediction for Bitcoin?

Plan B predicts Bitcoin could reach $1 million by 2025, with a roadmap including $100,000 by December 2024, driven by new ETFs.

What is the formula for Stock-to-Flow in Bitcoin?

The formula is: Stock-to-Flow = Current Supply / Annual New Supply. For Bitcoin in 2025, it's roughly 18.9 million coins divided by yearly mined coins.

Can PlanB predict Bitcoin could reach $300000 by 2026?

Yes, PlanB predicts Bitcoin could reach $300,000 by 2026 based on his stock-to-flow model. As of 2025, this forecast remains valid and aligns with current market trends.

Who is Plan B in Bitcoin?

Plan B is a Dutch investor known for creating the Stock-to-Flow model, which uses scarcity to predict Bitcoin's value. His model gained popularity after Bitcoin's 2020 halving event.