Vitalik Buterin, Ethereum’s co-founder, criticized the stock-toflow model via Twitter. According to the Ethereum cofounder, financial models that provide false assurances are dangerous and should be ridiculed. Vitalik Buterin, co-founder of Ethereum, spoke out Tuesday against simplified financial models for crypto-markets. He cited the stock-toflow model as an example.
Buterin tweeted his concern about the stock-toflow model and his inability to accept simplistic financial models.
He stated that financial models that give people false assurances and predetermination that numbers-will-go up are harmful and should be ridiculed.
Stock-to-flow, a method that bitcoin (BTC), traders use to predict the price of cryptocurrency, is the same model used for natural resources such as gold. These are rare resources, so the stock-to flow ratio will rise.
The ratio simply measures the total amount of bitcoin on the market divided by how many are mined each year. This creates a line (the blue line below) that shows future prices.
The stock-to-flow model is based on the chart above. The model is now beginning to decouple from bitcoin’s actual price, as highlighted by Sassal.eth and Buterin.
According to Coinbase data via TradingView, the model predicted that bitcoin would be worth $67,175 by June 18. However, bitcoin traded at $20,845 as of writing.
