The S2F model of Bitcoin implies a false sense of certainty according to Vitalik Buterin

The S2F model of Bitcoin implies a false sense of certainty according to Vitalik Buterin

Ethereum co-founder Vitalik Buterin criticized the controversial stock-to-flow (S2F) model of bitcoin (BTC), popularized by a Dutch pseudo institutional investor called PlanB.

The stock-to-flow model of BTC generated a lot of interest during the bullish phase, as it correctly predicted some prices, but it also disappeared several times during this phase.

Buterin has joined the growing list of critics of the model that aims to predict the price of BTC:

Stock-to-flow does not look good at the moment. I know that it is rude to rejoice in all that, but I think that there are financial models that give people a false sense of certainty and a prediction that the number of numbers will rise and that the all jibes they find they deserve.
– vitalik.eth (@VitalikButerin) June 21, 2022

The S2F model quantifies an asset price based on its scarcity and has been used primarily for popular metals such as gold and silver. The popular PlanF S2F pattern suggests that the price of BTC will continue in a steady and significant way upwards with about ten returns every four years.

The big problem with the S2F model, which many critics have said, is the one – sided estimate, which only takes into account the supply of BTC, and assumes that demand will continue to grow.

Read also: Vitalik Buterin shares his thoughts on non-financial blockchain use cases

While demand for BTC has shown significant growth, other factors, such as inflation-assisted inflation, have severely undermined consumer purchasing power. Thus, the S2F model does not take into account a number of macroeconomic factors that primarily affect market sentiment.

Right, the model only considers the scarcity / S2F ratio, it is the only input for the model. Everything else, application, macro, encryption, covid, war etc causes deviations. The model is VERY close. In addition, the current extreme macroeconomic context means that all indicators (rsi, 200wma, etc.) indicate extreme values.
– PlanB (@ 100trillionUSD) June 20, 2022

Plan B responded to Buterin’s criticism by saying that “people are looking for scapegoats for their failed projects or bad investment decisions.”

After an accident, some people look for scapegoats for their failed projects or bad investment decisions. Not only newcomers, but also victim “leaders” come with the tendency to blame others and play the victim. Remember those who blame others and those who remain strong after an accident.
– PlanB (@ 100trillionUSD) June 21, 2022

According to the S2F model, BTC was expected to reach the $ 100,000 mark by the end of December 2021. Although it has admitted in the past that some defects may be due to external factors, the popularity of the model during the most bullish spike. criticism.

We’ll know by the end of 2021: S2F predicts that btc must be $ 50,000 (or even $ 100,000 if you’re using the new model), even though Dave’s model is under $ 30,000. In addition, Dave’s next level is predicting $ 81,000, as S2F targets multiple (3x) of $ 50,000-100,000.https: //
– PlanB (@ 100trillionUSD) September 3, 2019

The debate over faulty financial models comes when BTC recorded a new four – year level at $ 17,748. The price of the first cryptocurrency was trading at $ 21,321 at press time, recording a 4% rise in the last 24 hours.

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