PlanB Says the Bitcoin Top Isn't In, and the S2F Model Agrees

Bitcoin analyst PlanB has argued that the cryptocurrency has not yet reached its peak price. This claim is supported by his Stock-to-Flow (S2F) model, which measures scarcity by comparing existing supply to new yearly supply. The model shows a strong correlation between Bitcoin's scarcity and its market value.

PlanB introduced the S2F model in 2019 to compare Bitcoin with commodities like gold and silver. By using a power-law regression, the model links Bitcoin's price to its stock-to-flow ratio. As supply becomes scarcer, the model predicts a higher valuation.

Bitcoin's halving schedule is a central component of the model. Each halving reduces the new supply entering the market, increasing the stock-to-flow ratio. This dynamic supports the view that scarcity is a primary driver of Bitcoin's price trajectory.

Why Has the S2F Model Been Updated?

PlanB expanded the model in April 2020 with the S2FX framework. This new version incorporated Bitcoin's market phases and cross-asset comparisons with gold and silver. The S2FX model aims to provide a more refined view of Bitcoin's expected value.

The updated model projected a market value for Bitcoin of around $5.5 trillion between 2020 and 2024. This suggests that as scarcity continues to rise, so too could Bitcoin's price. The S2FX model accounts for Bitcoin's evolving market dynamics, including shifts in investor sentiment and macroeconomic conditions.

How Do Market Dynamics Influence the Model's Accuracy?

The S2F model has faced criticism, particularly from those who argue that markets are efficient and can discount future events. In 2020, PlanB defended the model by addressing concerns such as government bans and miner death spirals. He argued that these overestimated risks influence how Bitcoin is priced.

Market efficiency challenges the idea that a model based on supply and demand can predict future prices accurately. However, the S2F model has gained traction among analysts who believe that Bitcoin's scarcity is a structural advantage. This has led to increased interest from institutional investors and hedge funds.

What Are the Implications for Investors?

Bitcoin's scarcity, as measured by the S2F model, continues to rise. This suggests that the model's projections remain relevant. For investors, this implies that Bitcoin could still deliver significant returns as new supply diminishes.

As the 2026 halving approaches, the S2F model may gain further validation or face new scrutiny. Investors should consider the model as one of many tools for assessing Bitcoin's long-term potential. Market conditions, regulatory developments, and macroeconomic factors will also play a role in shaping Bitcoin's price action.