Reading Time: < 1 minute
November 25, 2020

Crypto RFQ

Why the Bitcoin Stock-to-Flow Model Is Flawed With Strix Leviathan


Popular cryptocurrency trader “Plan B” on Twitter is behind the controversial Bitcoin stock to flow model that took the crypto community by storm. (3:40) Traders jumped on it, enamored with the prediction for another BTC bullish run.

Strix Leviathan CEO Jesse Proudman, however, says not so fast. (4:07) While he and his team are big believers in the need for fundamental valuation models in the cryptocurrency space given the speculative nature of the market, the stock-to-flow formula is not all it’s cracked up to be. According to Proudman, not only is the theory behind the stock-to-flow model flawed but the math is invalid. (4:30)

For example, the stock to flow model projects Bitcoin to be $100,000 in 2020 and more than $245 billion per coin as the model unfolds in the coming decades.

(4:55) “It’s a marketing model more than anything else in our eyes. And it’s disingenuous — it attracts people to invest in this space for the wrong reasons. We believe this is an interesting asset class. We believe the price will go up over time. But we want people to invest for the right reasons, not because they’re following a model that’s blindly not theoretically valid,” said Proudman.

Share the love ❤️
Gerelyn Terzo
Gerelyn caught wind of bitcoin in mid-2017 and after learning about the peer-to-peer nature of Satoshi's creation has never looked back. Previously she covered institutional investing and fintech for several major trade publications. Gerelyn resides in Verona, N.J.

All of the content published on this site is strictly for informational and educational purposes and neither does it constitute investment advice nor solicitation to buy or sell blockchain-based tokens or securities. No investments whatsoever should, therefore, be made based upon information provided or discussed by any guests or hosts appearing within this video or audio content.

Any appearance by any company or individual does not infer any kind of endorsement by Scrumline Ltd (trading as Coinscrum) of either their products and/or services or in any related investment opportunity that they may be pursuing from time to time.

Crypto-tokens and equity investments are high risk in nature and you should always take the advice of a professional financial advisor from within the jurisdiction in which you reside before making any investment decisions.