You don’t need S2F to value Bitcoin

  • The Bitcoin supply, which overall is fixed, but is componentized into “stock”, the existing mined supply, and “flow”, the supply yet to be mined.
  • The Bitcoin block reward schedule, which halves every four years, and dictates the future mining rate of Bitcoin for the next century.
  • The prior Bitcoin price, in the years since its public release in 2009.

Demand is variable

  1. The US and EU proclaim “we will introduce legislation to ban bitcoin”, or
  2. The US and EU proclaim “we will start buying bitcoin as a treasury reserve asset”

These are black swan events

S2F could be causing demand!

But it’s programmed!

But the market isn’t totally efficient!

But the market is based on emotion!

  • Human emotions/psychology being constant and unchanging over time.
  • Emotional retail investors being the main controlling force in the market, even as institutions role in.

Only Bitcoin can be scarce

But Bitcoin was first!

  • Being first enables Bitcoin’s first-mover advantage, which in turn enables higher demand. More people are familiar with the product, more people want to buy it.
  • Being best, means that more people are willing to bet on Bitcoin’s future success, by buying in and hoping for a future return as the rest of the market realizes the same fact.

But Bitcoin is fundamentally better!

S2F has been accurate since 2010

S2F has been accurate since 2019

But there is a correlation

S2F is the only accurate model

  1. That S2F forms an accurate model, because it takes supply and halving into account, and
  2. That supply and halving should be taken into account, because S2F demonstrates that it results in an accurate model.

Isn’t it a pretty big coincidence though?

But the miners could be setting the price, right?

Can supply be manipulated?


  • Demand, not supply, is the the crucial thing to consider when attempting to predict Bitcoin’s price trajectory.
  • Supply is pre-defined and static, demand is variable and unpredictable, even ignoring black-swan events.
  • If S2F is itself causing demand, that offers no proof for the validity of the underlying S2F reasoning.
  • The efficient market hypothesis dictates that anything known ahead of time, including the Bitcoin reward schedule, must be priced in.
  • Risk is something which may not be known fully by the market, and may not be priced in, but this is orthogonal to S2F
  • Emotions and psychology are also difficult to anticipate, and also can not be predicted. These are also orthogonal to S2F
  • Bitcoin is not the only asset which can be scarce, so scarcity can not be the factor which makes S2F apply to it and no other coin.
  • Being ‘first’ or ‘best’ are more likely to be drivers of price appreciation. But these have more to do with demand, than with supply.
  • Being accurate since 2010 isn’t a selling point for a model derived as a linear regression
  • Being accurate since 2019 isn’t a selling point when other models can easily achieve the same, and when the error margins are so large.
  • Survivorship bias is a real thing, and can not be discounted for S2F
  • It is unlikely miners could be setting the price based on current newly mined supply, since they make up such a small amount of the trading volume.
  • Even if you could tweak supply and make it variable or reduce it ahead of schedule, it is unlikely the Bitcoin price would follow in lockstep.



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