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Vitalik Buterin Criticizes The Bitcoin Stock-To-Flow Model, Here's Why

coingape.com 21 June 2022 08:19, UTC
Reading time: ~2 m

Ethereum’s founder Vitalik Buterin criticized the Stock-to-Flow (S2F) model, claiming that the model gives false predictions about Bitcoin (BTC) price. He thinks financial models that give wrong forecasts are harmful as they make people believe that prices will go up.

In response, the creator of the S2F model PlanB argues that some people just look to blame others for their failed projects and wrong investment decisions after the crypto market crash.

Vitalik Buterin Slams the S2F Model for Giving False Predictions

Vitalik Buterin in a tweet on June 21 criticized the S2F model for giving false predictions about Bitcoin price. The tweet came after the Bitcoin (BTC) price has diverged immensely from the S2F trendline after the crypto market crash.

“Stock-to-flow is really not looking good now. I know it’s impolite to gloat and all that, but I think financial models that give people a false sense of certainty and predestination that number-will-go-up are harmful and deserve all the mockery they get.”

Bitcoin (BTC) S2F Model. Source: BuyBitcoinWorldwide

The S2F model is considered one of the best models to predict BTC prices. Historically, the model had suggested the Bitcoin price correctly, but the two crypto market crashes and rising FUD have caused significant variations.

PlanB, in response to Vitalik Buterin’s tweet, said some newbies and leaders are blaming others for their failed projects and investment decision. Moreover, he asserts the importance of standing stronger than blaming others after a crash.

However, in a tweet on June 20 PlanB claimed the inefficiency of the model in the future.

“S2F model certainly had a good run from Mar2019 (BTC 4K) to Mar2022 (BTC 45K). For now: either BTC is extremely undervalued and will bounce back soon, or S2F will be less useful in the future.”

Others Also Criticized the S2F Model

After the Bitcoin (BTC) price diverged considerably from the S2F trendline, many people fear the S2F model is inaccurate. Ethereum educator and angel investor sassal.eth, Terra’s insider FatMan, and other Ethereum supporters criticized the S2F model.

Vitalik Buterin also explained that the S2F model when applied to Ethereum (ETH) price and the current ETH’s flow the value comes out negative.

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