Vitalik Buterin criticises PlanB’s Stock-to-Flow model
Ethereum co-founder Vitalik Buterin backed The Daily Gwei founder Anthony Sassano, who urged PlanB to delete his account following the failure of the Stock-to-Flow (S2F) model promoted by PlanB.
Stock-to-flow is really not looking good now.
I know it’s impolite to gloat and all that, but I think financial models that give people a false sense of certainty and predestination that number-will-go-up are harmful and deserve all the mockery they get. https://t.co/hOzHjVb1oq pic.twitter.com/glMKQDfSbU
— vitalik.eth (@VitalikButerin) June 21, 2022<\/blockquote>
“Gloating is impolite, but I think financial models that give people a false sense of certainty and predestination about asset price growth are harmful and deserve all the mockery,” — wrote Buterin.
The Ethereum co-founder added to the post an S2F chart showing a substantial divergence between Bitcoin’s current price and the value implied by the model.
Shortly before Buterin’s tweet, PlanB presented an updated Stock-to-Flow variant incorporating the latest data. He acknowledged that both variants had worked well for three years up to March 2022.
“At the moment: either BTC is severely undervalued and will bounce back soon, or S2F will be less useful in the future” — wrote the analyst.
#bitcoin S2F original 2019 model (grey) and newest fit on most recent data (white dots). S2F model certainly had a good run from Mar2019 (BTC 4K) to Mar2022 (BTC 45K). For now: either BTC is extremely undervalued and will bounce back soon, or S2F will be less useful in the future pic.twitter.com/JdnLINpzTV
— PlanB (@100trillionUSD) June 20, 2022
PlanB’s response to Buterin’s criticism was measured. He said that after a crash many people engage in “scapegoating for their failed projects or misguided investment decisions.” Leaders, too, fall into this pattern, he added.
After a crash aome people are looking for scapegoats for their failed projects or wrong investment decisions. Not only newbies but als «leaders» fall victim to blaming others and playing the victim. Remember those who blame others and those who stand strong after a crash. https://t.co/4nJdHq84pm
— PlanB (@100trillionUSD) June 21, 2022
Subsequently PlanB presented a chart of five different models for forecasting Bitcoin’s price. According to the illustration, the most accurate picture comes from estimates based on difficulty and mining costs for the first cryptocurrency. S2F, in turn, offers an overly optimistic view.
Prediction is hard, especially the future. EMH even says predicting financial markets is impossible. For who is still interested in models, here are 5 BTC valuation models:
— Time (log regression, rainbow) and S2F too high
— UTXO/TX too low
— Difficulty/Mining_cost currently best pic.twitter.com/9FYCbWmbp7— PlanB (@100trillionUSD) June 21, 2022
Earlier, in November 2021, Huobi analysts described the Stock-to-Flow model as unsound.
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