How to Value Bitcoin

PlanB’s Bitcoin S2F Model and Phase Transitions

Who is PlanB?

Why do we care?

Modeling Bitcoin Value with Scarcity

The stock-to-flow (S2F) ratio of a commodity is used to calculate the yearly growth rate of new supply (flow) coming into existence against the existing supply (stock).

S2F Ratio = stock / flow

Bitcoin’s supply is fixed. There will never be more than 21M bitcoin. New bitcoins are created in every new 1MB block of transaction data. Blocks are created every 10 minutes (on average), when a miner finds the hash that satisfies the Proof of Work (PoW) required for a valid block. Every 4 years, bitcoin’s immutable software cuts its new issuance in half, therefore bringing exponentially less bitcoin into circulation and doubling the the stock-to-flow ratio. This is why it’s considered an inflation hedge asset and makes it a very attractive investment in the current global macro environment — mass fiscal (government) and monetary (central bank) stimulus. While exponentially more dollar units explode into the financial system and devalue the currency; bitcoin is doing the exact opposite by becoming a harder and more scarce currency. A more sound money. Below is a chart detailing bitcoin’s stock-to-flow ratio over the next hundred years. As you can see bitcoin’s halving has a massive impact on its scarcity. By the next halving, bitcoin’s S2F will have increased to 123.69 in 2024 and by 2036 bitcoin’s S2F will have crossed 1,000. It’s anyone’s guess on how this will affect price, but if PlanB’s model is correct, bitcoin will be valued in the millions of dollars in the next 5–10 years.

PlanB closes his article articulating where he sees the money coming from to send bitcoin’s market cap into the trillions of dollars.

“People ask me where all the money needed for $1trn bitcoin market value would come from? My answer: silver, gold, countries with negative interest rate (Europe, Japan, US soon), countries with predatory governments (Venezuela, China, Iran, Turkey etc), billionaires and millionaires hedging against quantitative easing (QE), and institutional investors discovering the best performing asset of last 10 yrs.”

Bitcoin Stock-to-Flow Cross Asset Model


Phase 1: Water as a solid

Phase 2: Water as a liquid

Phase 3: Water as a gas

Phase 4: Water ionized

US Dollar

Phase 1: The US Dollar transitioned from a gold coin (One dollar = 371.25 grains of pure silver = 24 grains of gold)

Phase 2: Transitioned to paper backed by gold (“gold coin payable to the bearer on demand”)

Phase 3: Transitioned to paper back by nothing (“this note is legal tender for all debts, public and private”).


Phase 1: Proof of Concept — post Bitcoin white paper, S2F 1.3 and market value of $1M

Phase 2: Payments — 1BTC = $1, S2F 3.3 and market value of $58M

Phase 3: E-Gold — after 1st halving in Nov’12, almost 1BTC = 1 ounce of gold, S2F 10.2 and market value $5.6B

Phase 4: Financial Asset — after 2nd halving in July’16, Bitcoin network is seeing $1B transaction per day, legal clarity in Japan and Australia, futures markets at CME and Bakkt, S2F 25.1 and market value of $114B

Phase 5: Reserve Asset — after 3rd halving in May’20, bitcoin is being used by corporations and sovereign nations as treasury reserve asset, S2F 56 and market value of $240B

PlanB then plots the bitcoin phase transition price clusters against the other assets in his Bitcoin S2F Cross Asset Model (S2FX). Below you can see bitcoin’s monthly market value data clustering around specific S2F ratios as it climbs closer toward’s the silver and gold market values. It’s important to note that the model forms a perfect straight line through all asset classes.


$5.5T / 19M BTC = $289,473.68

We hope this article was helpful and you can learn more about PlanB — here.

2021 should be a very exciting year for bitcoin investors.


**This is not financial advice. Investing in bitcoin and cryptocurrency is extremely risky. Please do your own research. The ideas and news presented in this newsletter are my personal opinions and meant for informational and entertainment purposes only.



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Web3 Development Company | Bridging the Gap to Digital Assets