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Why Ethereum’s Inventor Attacked This Bitcoin Pricing Model

Why Ethereum’s Inventor Attacked This Bitcoin Pricing Model

Inventor of Ethereum Vitalik Buterin Got it The controversial bitcoin price model aimed at stock-to-flow (S2F). Buterin believes the model “doesn’t look good” and openly criticized it because it gives crypto investors a “false sense of certainty”.

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According to Buterin, this creates the illusion that bitcoin will continue to rise upwards. As recent price action has proven, this can cause many people to lose their initial investment and much more. Buterin said via his Twitter account, offering the following chart:

I know it’s rude to boast and all that, but I think financial models that give people a false sense of certainty and predictability that number-wish-ups are harmful and that they deserve all the derision.

Stock to flow model. Source: Vitalik Buterin on Twitter

As seen in the chart, created by pseudonymous analyst Plan B, this model predicted that the price of BTC was about to reach $100,000 by the end of 2021. The model deviated as bitcoin went downhill later that year, and many consider it a failure.

Opponents such as Vitalik Buterin argue that the model fails to take into account other key variables and only projects the BTC price upwards for the foreseeable future. For example, it failed to predict what would happen to bitcoin under the current economic conditions, with a decrease in global liquidity and an increase in interest rates by the US Federal Reserve (Fed).

In response to Buterin’s comment, the inventor of the S2F model, Plan B Told,

After an accident some people are looking for scapegoats for their failed projects or wrong investment decisions. Not only novices but “leaders” also fall prey to blaming others and playing the role of victim. Remember those who blame others and those who stand strong after an accident.

BTC price is trending down on the 4-hours chart. Source: BTCUSD Tradingview

Is it possible to predict the price of bitcoin?

Plan B has made changes to its S2F model and now refers to the 2019 basic version and the new S2F version. As seen below, both versions predict that the price of BTC will be on an uptrend in 2022 and in the near future.

If BTC remains at its current levels, the S2F model will “be less useful” in the coming months, in the coming months. The second scenario is that BTC is “extremely undervalued and will return soon”.

On the effectiveness of S2F and any other models used to predict financial performance, Plan B said:

Prediction is hard, especially the future. EMH even says that it is impossible to predict the financial markets.

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Later, as talks heat up about the S2F model, Plan B couple,

That’s why I share my analysis and charts for free. Never told anyone to buy or what/when/how/how much to buy. Now covid, china sanctions, russia war and inflation tank all assets including bitcoin…and somehow some wiener blames his investment decisions on me? lame.

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Why Ethereum’s Inventor Attacked This Bitcoin Pricing Model

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