Why Is the Bitcoin Stock-to-Flow Model Under Scrutiny? Can a supply schedule predict a price? That is the bet behind Bitcoin Stock-to-Flow, a model that treats scarcity as the main driver of
Can a supply schedule predict a price? That is the bet behind Bitcoin Stock-to-Flow, a model that treats scarcity as the main driver of value.
When a pseudonymous analyst known as PlanB published the idea in March 2019, it spread fast, because Bitcoin's halvings seemed to line up with its biggest rallies. Then real markets diverged. The 2021 peak fell short of the model's path, and later price moves pushed outside its bands.
This guide explains what the model measures, how the formula works, how to read the chart, where its forecasts landed, and how it compares with other valuation tools. Price models of this kind often feed into broaderBitcoin price forecasts, which makes their track record worth checking.
Stock is the total supply that already exists. Flow is the new supply produced in a year. Dividing one by the other shows how many years of current production it would take to recreate today's supply, so a higher ratio means scarcer new supply.
PlanB introduced the framework in March 2019 in an article on modelling Bitcoin's value through scarcity. He plotted the ratio against Bitcoin's market value and fitted a regression line through the points. The underlying idea comes from commodity analysis, where stock-to-flow is used to compare metals such as gold and silver.
Gold has a high ratio because mining adds only a small slice to a vast above-ground stockpile. Commonly cited estimates put it at roughly 60. Bitcoin started far lower, but each halving cuts issuance and lifts its ratio, which is why Bitcoin Stock-to-Flow model supporters call it digital gold.
The formula is simple: stock divided by annual flow. For Bitcoin, stock means coins already mined, capped at 21 million, and flow means new coins issued through block rewards, a mechanism introduced in Satoshi Nakamoto'soriginal whitepaper.
The current block reward is 3.125 BTC, according to theofficial halving schedule. At about 144 blocks a day, that is roughly 450 BTC daily, or around 164,000 BTC a year. With close to 20 million coins in circulation, the Bitcoin Stock-to-Flow ratio lands near 120. These are approximations, since block times vary.
The reward is cut in half every 210,000 blocks, which halves flow and roughly doubles the ratio, assuming supply grows slowly.
Halving
Date
Reward After
First
November 28, 2012
25 BTC
Second
July 9, 2016
12.5 BTC
Third
May 11, 2020
6.25 BTC
Fourth
April 20, 2024
3.125 BTC
Fifth
2028 (estimated)
1.5625 BTC
A typical chart overlays Bitcoin's market price on a smooth model line, often with bands that show how far price is allowed to drift from it.
Divergence is the gap between market price and model price. Price below the line implies, in the model's logic, an undervalued asset, while price above it implies the reverse. A persistent gap can also mean the model has stopped fitting.
Providers smooth the ratio differently. Some use a 463-day average of issuance, others use shorter windows or the live block reward. Each choice changes the model price, so two charts can disagree on the same day.
After the May 2020 halving, Bitcoin climbed sharply and tracked the model line for a stretch. That run won the chart a large following and a place in everyday market commentary.
Supporters had pointed to levels near $100,000 around the end of 2021. Bitcoin peaked near $69,000 in November 2021 and then turned lower.
In June 2022, Bitcoin dropped to about $17,600 and broke below the model's lower band for the first time. By August 2025, the model's average value sat near $500,000 while Bitcoin traded around $120,000. Gaps that large are hard to reconcile with a model claiming that scarcity alone sets price.
Price depends on demand as well as supply. Interest rates, regulation, exchange access, ETF flows and investor sentiment all shape demand, and none of them appears in the formula. Halvings are also public events, so markets may price them in long before they happen.
The model rests on only a few halving cycles, a very small sample. A common criticism is that both price and the ratio trend upward over time, which can produce a strong-looking correlation without proving cause.
A model line is a statistical fit to past data, not a promise. Wide bands also make it easy to say the model still works, because many prices fit inside them. A forecast that can rarely be wrong is hard to test.
The Power Law model fits price against time since Bitcoin's first block on a log-log scale. It does not depend on halvings, and its corridor usually implies lower long-term values than S2F projections.
Moving averages, such as the 200-day line used to judge trend, react to prices already traded. They do not forecast a level, but they adjust to new conditions faster than a fixed supply model.
On-chain data such as realized price, active addresses and exchange balances reflects what holders actually do. Layering it over a supply model adds demand-side context, and network health, includingBitcoin network security, adds another layer.
S2F remains a clear way to explain why halvings matter and how issuance shapes scarcity. It works better as a teaching tool for supply mechanics than as a price oracle. OngoingBitcoin market coverage shows how supply narratives meet real demand.
The model's core idea, that issuance matters, has held up. Its price targets have not. The evidence fits treating it as one input among several rather than a stand-alone forecast.
Useful questions about any model-based forecast include:
Which formula and data window does the chart use?
Has the model been refitted after missing its targets?
How wide are the bands around the model line?
Does it account for demand factors such as regulation and capital flows?
Does it give a specific price and date that can be tested?
The Bitcoin Stock-to-Flow model began as a neat way to link halvings with scarcity, and that part of the story is sound. Its price forecasts are the weak point, with the 2021 shortfall and the wide gaps since then leaving real doubt about its accuracy.
Whether the 2028 halving brings price back toward the model line is unconfirmed, and no one can say it will. For now, the evidence supports using it to understand supply, not to predict price.
Disclaimer:This article is for informational and educational purposes only and is not financial advice. Cryptocurrency assets are volatile and involve risk. Always conduct your own research before making financial decisions.
