Vitalik Buterin thinks the Bitcoin Stock-to-Flow model is wrong for this reason

  • Ethereum co-founder Vitalik Buterin criticized Plan B’s Stock-to-Flow model, saying it gives investors a false sense of certainty.
  • On June 18, the price of Bitcoin broke below the model’s lower boundary for the first time, calling its validity into question.
  • As the price of Bitcoin falls, Plan B claims that either BTC is extremely undervalued and will rebound, or the pattern is less helpful.

But think that the Bitcoin Stock-to-Flow model offered by Plan B is unreliable. On June 18, Bitcoin price invalidated the pattern for the first time, breaking below the lower bound and raising questions about its validity.

The Plan B Model for Bitcoin Price Prediction Invalidated

On June 18, 2022, the price of Bitcoin fell to a low of $17,600 and broke through the lower boundary of the Stock-to-Flow pattern for the first time. This called into question the validity of the mathematical model.

The Stock-to-Flow (S2F) model offered by Plan B suggests that the price of Bitcoin can be predicted to have trained and increased tenfold on a steady upward trajectory, with returns almost tenfold every four years. The mathematical model compares the existing Bitcoin supply (the total amount available) to the new production flow (the amount mined in a specific year).

Rob Wolfram, a Bitcoin maximalist, always plots Bitcoin price against Plan B’s Stock-to-Flow model. The dark blue area represents one standard error from the predicted price and the light blue area represents two standard errors. In the following chart, the predicted price is extended into the future until January 1, 2027.

Rob Wolfram Plots BTC Price Against S2F Pattern

Buterin slams Plan B’s S2F model who says he deserves mockery

Vitalik Buterin, the co-founder of Ethereum, recently reviewed Plan B’s Stock-to-Flow model. Buterin argued that financial models that give people a false sense of certainty and project a number or predestination for the prices of an asset are harmful. The Ethereum co-founder thinks such models get all the laughs they get.

The Plan B model was deemed invalidated when Bitcoin price failed to reach $100,000, Wolfram’s projection, by the end of 2021. However, the analyst persisted in believing the model, arguing that Bitcoin is extremely undervalued and will rebound soon or that Stock-to-Flow will be “less useful” in the future.

Plan B responded to S2F’s criticism on Twitter and said the original model and latest tweak worked well from March 2019 to March 2022.

Analysts believe Bitcoin price is near a bottom

Netcost-Security analysts assessed the Bitcoin price chart and noted that the 200-week moving average is an important metric for the asset. They note that Bitcoin bottoms typically occur near the 200-week moving average. Therefore, it is likely that BTC will hit bottom soon. For more information, watch this video:

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