Bitcoin’s Stock-to-Flow Model: Why It’s Bullish Right Now

Bitcoin has long been considered the digital equivalent of gold due to its limited supply and decentralized nature. Investors and analysts have used various models to predict its future price movements, but one of the most popular and widely discussed models is the Stock-to-Flow (S2F) model, developed by the pseudonymous analyst PlanB. This model focuses on Bitcoin’s scarcity and its effect on price, and right now, it suggests a very bullish future for Bitcoin.

Understanding how the S2F model works and what it currently predicts can help investors make informed decisions. With Bitcoin’s next halving event approaching and increasing institutional interest in digital assets, there are strong indications that Bitcoin could see a major price surge in the coming months. This article will break down the Stock-to-Flow model, explain why it is signaling a bullish market, and address some criticisms of its methodology.

What Is the Stock-to-Flow Model?

The Stock-to-Flow model is a way of measuring an asset’s scarcity by comparing its total available supply (the "stock") to the rate at which new units are produced (the "flow"). This concept has traditionally been used for commodities like gold and silver, where a higher S2F ratio indicates greater scarcity and, in theory, higher value.

Bitcoin is unique because it has a fixed supply cap of 21 million coins, meaning that, unlike gold or other commodities, no more Bitcoin can ever be created beyond this limit. Additionally, Bitcoin undergoes a process called halving approximately every four years. This event cuts the rate at which new Bitcoins are created in half, making Bitcoin increasingly scarce over time.

For example, in Bitcoin’s early years, miners were rewarded 50 BTC per block. In 2012, the first halving reduced this reward to 25 BTC per block. The second halving in 2016 dropped it to 12.5 BTC, and the most recent halving in 2020 reduced it further to 6.25 BTC. In April 2024, the next halving will take place, reducing the reward to 3.125 BTC per block. Each halving event reduces the new supply of Bitcoin, leading to an increase in the Stock-to-Flow ratio.

What Does the Model Say Right Now?

As of March 2025, Bitcoin’s price is approximately $87,757, and its Stock-to-Flow ratio is higher than ever. According to the latest data, the 10-day average S2F-based price prediction stands at $384,000, while the longer-term 463-day average suggests a price of $159,000. These numbers indicate that, based on historical trends and Bitcoin’s increasing scarcity, the price is expected to rise significantly.

Bitcoin’s current S2F ratio is 115.38, meaning that, at today’s rate of production, it would take 115 years to produce the existing supply of Bitcoin. This is an incredibly high level of scarcity, surpassing even that of gold, which has a Stock-to-Flow ratio of around 60. The model suggests that as Bitcoin’s supply continues to tighten, its price will adjust upwards to reflect its increasing scarcity.

Why This Is Important for Bitcoin’s Price

Bitcoin has historically followed the Stock-to-Flow model’s projections with remarkable accuracy. After each halving event, Bitcoin has experienced massive price increases, as reduced supply leads to greater scarcity and higher demand.

For instance, after the 2012 halving, Bitcoin’s price rose from around $12 to over $1,100 within a year. In 2016, following the second halving, Bitcoin’s price increased from $650 to nearly $20,000 in late 2017. After the most recent halving in 2020, Bitcoin surged from $8,000 to an all-time high of $69,000 in late 2021. If this pattern continues, the post-2024 halving price rally could push Bitcoin’s value well above its current levels, potentially reaching six-figure territory.

Additionally, Bitcoin’s increasing scarcity is driving more interest from institutional investors and major financial institutions. Companies like MicroStrategy, Tesla, and various hedge funds have been accumulating Bitcoin as a long-term store of value, further reducing the available supply in circulation. This institutional demand, combined with the natural supply shock caused by halvings, strengthens the case for a continued bull market.

Potential Price Scenarios Based on the Model

If Bitcoin follows the Stock-to-Flow model’s projections, the price could reach anywhere between $159,000 and $384,000 in the near future. While these predictions may seem extreme, historical trends suggest that they are not entirely unrealistic.

A price of $159,000 would represent a 1.8x increase from today’s levels, while a price of $384,000 would mean a 4.3x increase. Even if Bitcoin falls short of these targets, a more conservative estimate of $100,000 to $150,000 would still be a significant gain for investors.

Criticism of the Stock-to-Flow Model

Despite its popularity, the S2F model is not without criticism. Some analysts argue that the model is too simplistic because it focuses solely on supply-side factors while ignoring demand, macroeconomic conditions, and external market forces.

For example, Bitcoin’s price can be heavily influenced by regulatory changes, technological developments, economic downturns, and investor sentiment—factors that the S2F model does not account for. Additionally, there have been times when Bitcoin’s actual price deviated significantly from the model’s predictions.

In 2021, for instance, Bitcoin’s price reached an all-time high of $69,000, but then declined sharply to below $20,000 during the 2022 bear market. The Stock-to-Flow model predicted a much higher price at that time, leading some critics to argue that it overestimates Bitcoin’s value during market downturns.

Nonetheless, while the S2F model may not be perfect, it has been remarkably accurate in predicting Bitcoin’s general long-term price trajectory. Even with occasional deviations, the overall trend has been upward, aligning with the model’s projections over time.

Final Thoughts: A Bullish Future for Bitcoin?

The Stock-to-Flow model suggests that Bitcoin is poised for another major price surge, with potential targets ranging from $159,000 to over $384,000 in the coming years. With the next halving event in April 2024, Bitcoin’s supply will become even scarcer, reinforcing the S2F model’s bullish outlook.

While no model can guarantee future price movements, Bitcoin’s past halvings have consistently led to massive price increases. Institutional demand, growing adoption, and the fundamental principle of scarcity driving value all support the idea that Bitcoin’s price could continue to rise significantly.

Investors should remain aware of the risks and criticisms associated with the model but also recognize that Bitcoin’s long-term potential remains strong. Whether or not Bitcoin reaches the six-figure price levels predicted by the Stock-to-Flow model, its increasing scarcity and historical trends suggest that the future remains very bullish for the world’s leading cryptocurrency.