Selected members of the crypto community continue to express skepticism about the stock-to-flow diagram, or S2F, a Price prediction model for Bitcoin (BTC) recently from the PlanB analyst.
Nico Cordeiro, Chief Information Officer of the Crypto Fund Strix Leviathan, called S2F a “chameleon”, Stanford professor Paul Pleifderer expressed that describes models that were built on dubious premises.
“Model accuracy is likely to be as successful in predicting Bitcoin’s future price as past astrological models in predicting financial results,” said Cordeiro.
Review of previous models
Cointelegraph reported on June 1 that PlanB had updated its signature chartThis suggests that Bitcoin was on the verge of a massive bull run that would result in a price of 100,000 BTC before the end of 2021. This was far from the $ 9,000 to $ 10,000 margin that the token had held for weeks.
On July 1, the analyst released a new “red dot”, indicating that two months had passed since BTC was halved.
#Bitcoin S2F card update .. RED DOT # 2 🔴 pic.twitter.com/L8Fl89yNYx
– PlanB @ (@ $ 100 trillion) July 1, 2020
Despite the fact that his model cannot predict BTC price movements in June with significant accuracy, PlanB continues to update revised versions of the S2F model for their 114,900 Twitter followers.
How the stock-to-flow diagram works
The S2F analysis treats BTC as a commodity comparable to gold, an asset with a fixed offer. This presupposes that new deliveries – ie the quantity mined – are negligible compared to the existing supply.
The analyst applies the same logic to Bitcoin: Around every four years, more tokens are mined that can be minedwith a total offer of 21 million BTC.
Cordeiro rejected the base of the S2F modelThis is based on the claim that the US dollar market cap for a commodity like gold is derived directly from its new offer rate. According to its IT manager, PlanB has not provided evidence of this idea. Statistical analysis was also used, which “leads to a high probability that an investigator will find incorrect results”.
Plan B replied Cordeiro’s accusations on Twitter that he used “old and controversial” arguments to support his claims.
It’s not all about being popular
Although Cordeiro admits that the S2F chart has reached “viral popularity”, attributes its success to Bitcoin enthusiasts who expect bullish runseven highlight directly to the analyst: “I forgot that the accuracy of a model depends on the number of Twitter followers of an investigator.”
The Director of Communications (CIO) is not alone in his skepticism. Ethereum co-founder Vitalik Buterin he claimed that the idea that bitcoin reductions lead to price increases is “unfathomable”.
“Investors should be very skeptical of this model, even if they believe that Bitcoin is digital gold,” says Cordeiro. “The SF article is not a correct and empirical analysis, but a marketing article in which the author tries.” convince readers that Bitcoin will be worth a lot more tomorrow. “This may or may not be true, but it has little to do with Bitcoin’s delivery program.”