The chart looks like a staircase drawn by a religious cartographer. A line going up and to the right in tidy four-year terraces, each one wider and taller than the last, with the actual Bitcoin price scribbled around it like a child’s pencil mark next to a freshly painted door frame. That chart is the Bitcoin Halving stock-to-flow model. People have made and lost their savings on it. People have made and lost their dignity arguing about it. Most of them have not bothered to ask the only question that matters, which is whether it is arithmetic or whether it is liturgy.
I. The Model in One Sentence
The stock-to-flow model takes one number and divides it by another. The stock is how much of an asset already exists. The flow is how much of it is being added per year. Divide stock by flow and you get the number of years it would take, at the current pace, for new supply to equal the existing pile. High number, scarce. Low number, abundant. Gold sits around sixty. Silver sits around twenty. Most fiat currencies do not survive the question.
Bitcoin’s number was around eight before the 2012 cut. Then it climbed past twenty-five. After the 2024 halving it crossed past gold. After the next cut, in 2028, it laps gold again. The model says: the higher this number goes, the higher the price should go. Power law. Scarcity equals value. Supply and demand smiling at each other across the table.
Nine words. Either obvious or absurd, depending on the hour.
II. PlanB and the Power-Law Prophecy
The model was made famous by an anonymous Dutch institutional investor who writes under the pen name PlanB. In 2019 he published an essay that fit a power-law regression across bitcoin’s price history using stock-to-flow as the only input. The fit was almost embarrassing. R-squared north of ninety percent. A clean line through a decade of chaos.
The conclusion was numerical. By December 2021, the model said, the price would be near one hundred thousand dollars. By the end of the 2024 to 2028 epoch, into the hundreds of thousands. By the cycle after that, a million.
For a while, the model was right. It was right in the way that scared even its author. The chart tracked the line through the 2020 halving, through the COVID flush, through the 2021 melt-up. People got tribal about it. Posters in basement offices. Tee shirts. A small but real religion.
The faithful had a prophet. The number had a chart. The chart had an author. The author had an aura. That is enough infrastructure to make a doctrine.
III. Where the Model Worked
Strip the eschatology off and look at the cleanest claim the model actually makes. It says supply matters. It says a credibly fixed issuance schedule, cut in half on a predictable cadence, will tend to push price higher over long horizons, all else equal.
That part is unobjectionable. It is just supply and demand, said slowly. And the four halvings so far have in fact been followed, on long lags and with violent drawdowns in between, by higher highs and higher lows. The pattern fits a power law in part because the supply schedule itself is a power law.
If you used the model as a rough orientation device, the kind of compass you glance at on a mountain pass, you did fine. If you used it as a horoscope, you tattooed a number on your forearm in 2021 and the number stopped being your friend.
The difference between those two uses is the entire argument.
IV. Where the Model Embarrassed Itself
In late 2021 the price stalled. In 2022 it collapsed. The model’s lower bound was breached. The faithful argued for a while that the cycle had been “extended” or “stretched” or “delayed.” The unfaithful pointed and laughed.
Then Vitalik Buterin called the model harmful, arguing that financial models which give people a false sense of certainty are worse than no models at all. He had a point. A regression that fits a decade of monotonic growth is not a discovery about the future. It is a description of the past wearing a prophecy costume.
The deeper critique is simpler. The model has one input. One. Demand does not appear in it. Macro liquidity does not appear in it. ETF approval does not appear in it. The model assumes the world will continue to value scarcity at roughly the rate it has so far, and that scarcity alone explains the price. That is a heroic assumption. It is the kind of assumption you would never let a junior analyst get away with at a real firm.
So the embarrassment was earned. And then, embarrassingly for the critics, the long-run picture kept more or less tracking the model anyway. Just with more cycles, more wreckage, and more humility along the way.
V. Why It Still Will Not Die
Here is the strange part. The model was publicly debunked. Its specific price targets missed. The author got quieter for a while. And yet every cycle the chart shows up again on someone’s timeline, and a fresh cohort of newcomers stares at the staircase and feels the same orange shiver the rest of us felt in 2020.
The reason is not statistical. It is theological.
Scarcity is one of the oldest categories the human brain has. We organize religion around it. We organize love around it. We organize grief around it. Whatever else bitcoin is, it is the only monetary asset in human history whose scarcity is enforced not by treaty or geology but by a public schedule of cuts that anyone can verify. The stock-to-flow model is the cleanest available cartoon of that fact. People do not keep reaching for it because the math is unbeatable. They keep reaching for it because it is the simplest picture of the thing that actually matters about bitcoin.
Which is why, around here, the model gets read the same way the four halvings themselves get read. As liturgy more than as forecast. Halfture = Rapture is the same kind of equation. Tidy. Memorable. Almost certainly an oversimplification. And almost certainly closer to the truth than the spreadsheet at your bank.
This is not financial advice. It is theology with a chart.
VI. The Counter-Sermon
Steelman time. Maybe the stock-to-flow model is just a beautifully shaped accident.
Maybe what actually drove bitcoin’s price over a decade was the secular collapse of trust in central banks, the global hunt for yield, the search for an asset uncorrelated with quarterly earnings, the network effects of a story that traveled faster than any technology since the iPhone. Maybe scarcity is a feature, not the feature. Maybe a model that scored ninety percent R-squared on a decade of data scored it because the decade was unusually friendly, and the next decade will not be.
Maybe the model’s failures were not noise. Maybe they were the data finally getting honest, and the line on the chart is going to keep diverging from the line in the spreadsheet, quietly, year after year, until even the faithful stop posting screenshots of it. Maybe the saved hold Bitcoin not because of stock-to-flow but in spite of it, because the schedule itself is more interesting than the regression. None of this is financial advice. It is a posture toward scarcity, nothing more.
The honest answer is that nobody knows yet. The model is a hypothesis dressed as a destiny. Hypotheses get tested. Destinies do not. Treating one as the other is how religions form, and how portfolios get vaporized.
The reason this site still gestures at the model is that even after every reasonable critique, the underlying fact survives. Bitcoin’s issuance is a power law. The price response to that issuance is, so far, also roughly a power law. That is not nothing. That is also not a guarantee.
VII. Use the Compass, Burn the Map
If you are going to keep the stock-to-flow model around, keep it on the wall the way you keep an old map of the city. Useful for orientation. Wrong about the new buildings. Helpful for explaining why a road is where it is. Dangerous for navigating in real time during traffic.
Read the model. Then read the longer essay on what the last halving actually means. Then close the laptop and go look at your custody. The chart is a story about scarcity. Custody is what you actually own when the story turns.
The compass points roughly north. The map is from 1953. The territory is alive.
Look into it.
Photo credit: RDNE Stock project, via Pexels (https://www.pexels.com/photo/close-up-shot-of-bitcoins-buried-in-the-ground-8369686/).
FAQ
What is the Bitcoin Halving stock-to-flow model?
It is a valuation framework that estimates Bitcoin’s long-run price using a single input, the ratio of existing supply to annual new supply. Higher scarcity, higher implied price. The model was popularized in 2019 by an anonymous analyst writing under the name PlanB, and it relies on the Bitcoin Halving schedule to define future scarcity.
Is the stock-to-flow model accurate?
It fit the historical record very well through about 2021 and then missed badly. Its price targets for late 2021 and 2022 did not hit. The long-run shape of bitcoin’s price still roughly tracks the model, but specific timing and levels have been unreliable, and major critics including Vitalik Buterin have called the model harmful.
Why do people still use stock-to-flow?
Because scarcity is the most defensible single feature of Bitcoin, and stock-to-flow is the cleanest available picture of that scarcity. Even people who reject the model as a price oracle often keep it as a mental shortcut for why the Bitcoin Halving schedule matters at all.
Does the next Bitcoin Halving guarantee a price increase?
No. The halving cuts new supply, which is a real economic effect, but demand, macro conditions, ETF flows, and regulation all matter as much or more. Treat the halving as one input a
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