Plan B (100trillionUSD) is a pseudonymous crypto personality known for creating the Bitcoin Stock-to-Flow model where he forecasts the value of Bitcoin (BTC) relative to its scarcity. On X (fka Twitter), he has a following of 1.9 Million as of May 2024. ^[1][2][3]

Background

Plan B is a former institutional investor who created the Bitcoin Stock-to-Flow (S2F) model^[3] in March 2019. Hailing from the Netherlands, he came to Bitcoin with a background in law and quantitative finance. He has spent several years examining and forecasting Bitcoin price action. ^[4]

"PlanB refers to an alternative plan for quantitative easing (printing money by central banks), negative interest rates and currency debasement in general. 100trillionUSD is a reference to the Zimbabwe 100trillion dollar note during the 2008 hyperinflation."^[5]

Plan B's Stock-to-Flow Model

The Bitcoin Stock-to-Flow (S2F) model uses scarcity to quantify Bitcoin's value. The S2F model applies not only to Bitcoin but also to gold, silver, and other assets. In 2020, PlanB's S2F model was widely cited after Bitcoin's 3rd halving event in May 2020. ^[6]

The institutional investor was the first to find similarities between Bitcoin and other precious commodities like gold and silver that store value over lengthy periods. Their characteristic – unforgeable scarcity – makes them retain their value. Increasing the supply in the short run is not possible. ^[6]

For instance, discovering new gold requires significant time and resources. Similarly, Bitcoin is scarce, and its supply is finite. Mining new Bitcoins demands substantial energy and computing resources, causing market capitalization to rise gradually. ^[6]

Initially, stock-to-flow ratios were employed to compare a commodity's existing supply with its production rate. However, for commodities that serve as a store of value, such as gold and silver, a high ratio signifies that their consumption is primarily for non-industrial purposes, such as a monetary hedge. In such cases, a high ratio indicates that the commodity is scarce. Therefore, interpreting a high stock-to-flow ratio for a commodity implies its scarcity. ^[6]

Formulation of the S2F Model

Plan B used the mathematical concept to calculate the stock-to-flow ratio of scarce commodities to model the value of BTC with scarcity. However, to achieve a projection of the numerical value of Bitcoin, the analyst had to find a way of quantifying scarcity. The investor concluded that scarcity measures from the S2F formula are accurate determinants of value. Market values rise when SF rises. What followed the formulation of the hypothesis was Bitcoin’s historical data collection. The actual figures would back up his claims and help him come up with a statistical model. ^[6]

Plan B collected actual monthly figures from the Bitcoin blockchain for approximately nine years (December 2009 to February 2019). His objective was to compare the monthly SF figure with the value. He got the total number of blocks by using a unique programming language to query the blockchain. With an established block subsidy (new coins entering circulation) of around 210,000 units in approximately four years, the analyst could estimate the monthly tally. ^[6][7]

Bitcoin Price Prediction Using The S2F Model

Many individuals employ the S2F chart as a tool for predicting Bitcoin’s future price trajectory. The S2F line serves as a projection of potential future valuations for Bitcoin. As per this model, the anticipated price for Bitcoin by the end of 31st December 2022 stands at $78,280. ^[6]

A modest increase was predicted for the subsequent year, with an estimated value of $81,956 on 31st December 2023. However, a notable leap is forecasted for the year after, projecting Bitcoin’s price to increase to $306,984 by 31st December 2024. ^[8]

Controversy on the Stock-to-Flow Forecast

Plan B’s model projects that the price of BTC would spike to $288,000 before the year 2024. That is before the blockchain conducts its next halving. Alex Kruger, an expert in economics and cryptocurrency, trashed the model claiming that it’s built from the most basic errors. He faulted S2F for making an erroneous assumption by maintaining that there’s indeed a long-running relationship between the price of Bitcoin and its scarcity. According to Kruger, the programmatic rise of a price index where everyone knows its numerical value at a certain point in time in the future looked nonsensical. ^[6]

Cory Klippsten, the CEO of Swan Bitcoin, distanced himself from the S2F model hype. He claimed that bullishness is only vital for the right reasons; otherwise, "you may lose your influence if your belief turns out a fallacy". Although he admits he had confidence in the model, he admits losing faith in its predictive power towards the end of 2019 after a close examination. He calls it “invalid.” ^[6]

Some critics also pointed out a potential issue with the model’s specification. The model states that ‘market value’ equals a function of Stock-to-flow, but ‘market value’ decomposes to ‘stock/price’ while ‘stock/flow’ is on the other side of the equation. This has been argued to be a tautological logic and therefore statistically invalid. ^[7][9]

Socials

Plan B has a Twitter (X) following of 1.9 million and on YouTube, a subscriber count of 159K as of May 2024. On YouTube, Plan B posts monthly videos of Bitcoin predictions. For May 2024, Plan B maintains the stock-to-flow model's validity, projecting a target of around $500k on average by 2028, with diminishing returns after halvings but still expects exponential growth until 50% adoption. ^[2][10]