Bitcoin Expert Denounces Popular Bitcoin Predictive Model
Pete Rizzo, a veteran cryptocurrency journalist, recently ignited debate within the Bitcoin community by questioning the validity of the well-known Stock-to-Flow (S2F) model. In a Twitter post, Rizzo suggested the S2F model, long esteemed as a tool to predict Bitcoin’s price, may have lost its relevance.
Rizzo, who has been involved in cryptocurrency journalism since 2013 and is currently Editor at Bitcoin Magazine and Editor-at-Large at Kraken, stated, “S2F is dead.” He pointed out the cyclical nature of Bitcoin’s monetary policy and criticized the S2F model for its assumption that demand generation is a passive process.
Bitcoin’s Passive Culture versus Active Demand Generation
According to Rizzo, Bitcoin enthusiasts tend to overlook the importance of actively fostering demand for the cryptocurrency. He suggests there’s a prevalent “passive culture” in the Bitcoin community, where many hodlers seem to rely solely on holding Bitcoin and waiting for its value to increase. “Entrepreneurs have to find ways to boost demand for Bitcoin,” Rizzo insists.
Unmasking the Stock-to-Flow Model and Its Creator
The S2F model, designed by an anonymous Dutch institutional investor known as PlanB, has been a prominent tool in predicting Bitcoin price. The model correlates the existing quantity of a commodity (stock) to its production rate (flow). In Bitcoin’s case, ‘stock’ denotes the existing Bitcoin supply, while ‘flow’ represents the yearly production of new Bitcoin.
The principle underpinning the S2F model is scarcity, and the model suggests that an asset’s value ascends as its scarcity heightens. It’s a principle applied historically to commodities like gold and silver, where scarcity substantially impacts their worth. The S2F model, however, is currently under scrutiny, as critics like Rizzo challenge its assumptions and relevance in the evolving Bitcoin landscape.
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