Introduction to the Bitcoin Stock-to-Flow (S2F) Model
The Stock-to-Flow (S2F) model, popularized by the anonymous analyst PlanB in 2019, proposes a quantitative method to assess Bitcoin's intrinsic value based on its scarcity. The S2F is defined as the ratio between the total existing stock and the annual production (flow) of new bitcoins. Formally:
S2F = Stock / Annual Flow
For Bitcoin, the stock corresponds to the total number of bitcoins already mined (approximately 19.3 million as of April 2024) and the annual flow is determined by the mining reward, which halves every 210,000 blocks (roughly every 4 years) during the halvings. This halving mechanism is central to the S2F dynamic.
Initial Predictions of the S2F Model and Their Comparison with Reality
PlanB initially published his model in March 2019, predicting that Bitcoinâs price would correlate with its S2F, with a significant increase post-halving. According to his calculations, Bitcoinâs theoretical price was expected to reach around 100,000 USD after the May 2020 halving (S2F rising from 25 to 50), then reach 1 million USD in the long term, when the S2F would hit 100 after the scheduled 2024 halving.
It is evident that while the model correctly anticipated the post-halving upward trend, it overestimated the speed and peaks reached in 2020-2022. The peak at 64,000 USD in 2021 remains below the 100,000 USD prediction. In 2022, the market experienced a sharp correction, which the S2F model did not foresee.
Identified Errors and Limitations of the S2F Model
Several critiques have emerged regarding the S2F model:
Ignoring macroeconomic factors: The model is purely quantitative and does not account for market dynamics, regulation, economic crises, or institutional adoption (Banque de France, 2023).
Assumption that price depends solely on scarcity: The correlation between scarcity (S2F) and price is statistically strong, but causality remains debated. Other scarce assets like gold have prices influenced by demand, geopolitics, etc.
Lack of consideration for technological innovations: Blockchain network evolution, forks, or altcoin competition are not modeled.
Overly simplistic linear model: The S2F assumes a linear relationship between the ratio and the logarithmic price, which does not reflect the extreme volatility observed.
A study by the French Financial Markets Authority (AMF, 2022) emphasizes that the S2F should be used cautiously and complemented by other indicators for robust analysis.
Why the S2F Model Remains a Useful Tool in 2026
Despite its limitations, the S2F model retains several merits:
Structuring perspective: It highlights Bitcoinâs growing scarcity, a fundamental factor in its long-term valuation.
Framework to understand market cycles: Halvings, which theoretically double the S2F, historically correspond to phases of price acceleration (INSEE, 2012-2024 data).
Communication base for investors: The S2F facilitates the popularization of scarcity and limited inflation concepts, essential to convince traditional investors.
Adaptability: Improved versions of the model have been proposed, integrating volatility, liquidity, or market sentiment (PlanB, 2023).
In 2026, with the next halving expected around April, the S2F will continue to be a key reference to anticipate supply dynamics.
Perspectives and Recommendations for French Investors in 2026
French investors should incorporate the S2F model within a multi-dimensional analysis:
Do not consider S2F as an absolute prediction: Use this ratio to understand scarcity but remain vigilant regarding macroeconomic, regulatory (AMF), and technological factors.
Monitor production and halving data: The 2024 halving, doubling the S2F, could initiate a bullish phase, but the magnitude remains uncertain.
Watch complementary market signals: Volatility, trading volumes, institutional adoption, and European regulation (notably MiCA) will strongly influence the price.
Maintain diversification: Bitcoin remains a volatile asset, and the S2F does not protect against severe corrections observed in 2018 and 2022.
Conclusion: The Stock-to-Flow Model Remains Relevant but Imperfect in 2026
In summary, the Bitcoin Stock-to-Flow model, although improvable, remains a fundamental tool to grasp Bitcoinâs intrinsic scarcity and its valuation cycles linked to halvings. Since 2019, its predictions have been partially accurate in trend but often overestimated in amplitude and timing. The modelâs errors mainly stem from its purely quantitative approach, ignoring numerous exogenous factors affecting the market.
For French investors in 2026, the S2F should be one analytical element among others, used to anticipate supply dynamics but complemented by rigorous macroeconomic, regulatory, and technological monitoring. The upcoming 2024 halving, which will double the S2F, could catalyze a new bullish phase, but risks of volatility and corrections remain high.
Verdict: The S2F model is still valid as a structural scarcity indicator, but it should no longer be taken as a strict price prediction. It remains a useful tool to understand Bitcoinâs cycles, provided its limitations are acknowledged and it is integrated into a prudent and diversified investment strategy.
