As the 2024 Bitcoin halving approaches, investors are speculating about the potential impact on Bitcoin price due to increased scarcity. Among the several ways to predict the price of Bitcoin, the Bitcoin Stock-to-Flow (S2F) model stands out.
The S2F model, popularized by X (ex-Twitter) user PlanB, is based on traditional stock-to-flow ratios used in commodity markets such as gold and silver, and provides interesting predictions about Bitcoin’s future value. Masu.
Target after Bitcoin halving in 2028 is $5 million
The stock-to-flow ratio, a measure of scarcity, is calculated by dividing the total amount of a good available by the annual production rate. A higher ratio indicates higher rarity and therefore higher value.
Bitcoin’s unique structure, with a total supply cap of 21 million BTC and a decreasing mining rate due to halving, presents an interesting case for the S2F model. Halvings, which occur approximately every four years, halve the proportion of new BTC in circulation. Therefore, the stock-to-flow ratio increases, implying an increase in value.
Read more: Bitcoin Halving Cycle and Investment Strategies: What You Need to Know
The application of the S2F model to Bitcoin has been a topic of intense debate. While this is consistent with some historical price trends, critics argue that it is an oversimplification. Therefore, other market trends such as demand, technological advances, regulatory changes, and broader economic factors are ignored.
“The stock-to-flow situation is not very good right now. I know it’s rude to gloat, but financial models that give people false confidence and doom that the numbers will go up are harmful and any I think it deserves ridicule.”
Despite these criticisms, the S2F model has regained momentum, especially with its predictions after the April 2024 Bitcoin price spike halved to $532,400. But it’s the predicted 2028 halving that grabs the headlines.
According to model creator PlanB, Bitcoin is predicted to reach an astonishing $5 million.
“That’s basically all you need to know, but of course there’s a wide margin of error. By the way, if you halve 5 and halve 6, the average price is $5 million,” says PlanB. states.
Read more: Bitcoin Price Prediction 2024/2025/2030
It is important to note that financial markets are inherently unpredictable and are influenced by a variety of factors beyond scarcity. Although the S2F model is insightful, it represents one perspective on the broader market. PlanB itself acknowledges this complexity, recalling past predictions.
“yes, [risk] Due to the wide margin (-50% +50% in the log), it is only correct directionally and orders of magnitude,” PlanB explained.
As the 2024 Bitcoin halving approaches, the crypto community remains divided. While some see the S2F model’s predictions as a beacon of optimism, others caution against relying on just one model. Therefore, whether his S2F model’s predictions for Bitcoin halving in 2024 and 2028 come true is still a speculative but pressing question.