Vitalik Buterin Weighs In
In a recent Twitter tête-à-tête, Ethereum co-founder Vitalik Buterin threw some serious shade at the much-discussed stock-to-flow (S2F) model, arguing that it’s as useful for predicting Bitcoin prices as a horoscope is for guiding career choices. This digital debate sparked on February 27, when Buterin joined a growing chorus of skeptics questioning the model’s accuracy.
What in the World is Stock-to-Flow?
For those still grabbing coffee when the stock-to-flow model was explained in class, here’s the gist: it’s a pricing model that uses the relationship between Bitcoin’s supply and its scarcity derived from mining rewards (or block rewards). Essentially, it’s predicting Bitcoin’s price to average around $100,000 between 2021 and 2024. Sounds credible, right? Well, not according to Buterin, who claimed, “Nah, that stuff is part of the 95%,” referring to what he believes is low-quality forecasting.
Post-Hoc Rationalizations and Other Fun Terms
Buterin’s critical take doesn’t stop at stock-to-flow. He derisively noted that most articles claiming an event will move the price of crypto—like Bitcoin soaring after a block reward halving or a celebrity tweet—are nothing more than “post-hoc rationalized bullshit.” This is basically a fancy way of saying that just because something happened after an event doesn’t mean the event caused it. So if you think your favorite crypto news site has it all figured out, you might want to think again.
ETH in Comparison to BTC
Currently, Ethereum (ETH) trades at about 2.5% of Bitcoin’s worth—considerably lower than its all-time high of over 15% back in early 2018. For Buterin, such price disparities must stick in his craw. Chart this volatility to his disbelief in models making predictions based on past patterns rather than actual market dynamics.
The Voices of Opposition
Buterin isn’t flying solo with his skepticism. Hardware wallet manufacturer Trezor joined the fray, denouncing stock-to-flow’s reliability, boldly stating that using this model for price forecasting is “absolute nonsense.” Trezor emphasized that a comprehensive price prediction needs to consider both supply and demand—something they feel stock-to-flow fails to address.
The Final Word
In a world where crypto predictions can seem like a game of darts blindfolded, it’s understandable that high-profile figures like Buterin and companies like Trezor are urging caution. Predicting market behavior with a model that ignores critical factors feels like throwing spaghetti at the wall to see what sticks. And as the crypto landscape continues to evolve, it seems that both critics and enthusiasts might need to recalibrate their forecasting strategies if they hope to keep participants informed.
