Vitalik Buterin Criticizes Bitcoin Stock-to-Flow Price Model

Ethereum co-founder Vitalik Buterin has denounced the popular Bitcoin stock-to-flow (S2F) price model as "harmful," joining a growing chorus of industry figures who argue the framework provides a false sense of certainty to investors. The critique follows a significant market downturn that has left Bitcoin trading at roughly $21,500, a level that deviates sharply from the model's previous projections of a $100,000 price tag by the end of 2021 [1, 3].

The collapse of the S2F model

The stock-to-flow model, created by a pseudonymous analyst known as PlanB, attempts to value Bitcoin by comparing its circulating supply to the rate of new coin issuance, which is reduced by 50% every four years during "halving" events [1, 3]. While the model gained significant traction during the 2021 bull run—at one point predicting a price of $135,000 by December 2021—it began to diverge from actual market performance as Bitcoin failed to sustain its November 2021 all-time high of $69,000 [1, 2].

Buterin’s comments were prompted by a tweet from Ethereum educator Anthony Sassano, who labeled the model an "epic failure" [1, 3]. Buterin argued that financial models suggesting "number-will-go-up" with predestined certainty deserve mockery because they can mislead market participants [1, 2]. This criticism coincides with a broader market slump that recently pushed Bitcoin to an 18-month low below $20,000, casting doubt on the model's continued relevance [1].

Response from the model's creator

PlanB has defended his work, characterizing the criticism as an attempt by others to find "scapegoats" for their own failed investment decisions or projects [1, 2]. The analyst maintained that he never provided financial advice or told users when to buy, noting that his analysis was shared for free [2].

Regarding the current state of the market, PlanB suggested that Bitcoin is either currently "extremely undervalued" and poised for a recovery, or the S2F model will prove less useful as a predictive tool in the future [1]. Despite the backlash, the analyst retains a significant following, with some supporters encouraging him to continue providing his perspective on market trends [2].

What to watch

• Price Deviation: Monitor whether Bitcoin’s price continues to trade significantly below the S2F trendline, which currently projects values between $100,000 and $110,000 for the year [1].
• Market Sentiment: Observe whether the failure of high-profile valuation models leads to a shift in how retail investors assess Bitcoin’s scarcity-based price potential.
• Model Utility: Watch for further commentary from analysts on whether alternative valuation methods, such as mining costs or UTXO-based metrics, gain prominence as the S2F model faces increased scrutiny [2].

The debate highlights a deepening divide in the crypto industry between those who rely on scarcity-based valuation models and those who view such frameworks as fundamentally flawed. Whether the S2F model is eventually discarded or viewed as a relic of a specific market cycle remains an open question for investors.