Inventory-to-Flow Model Sparks Debate Again! Hedge Fund Investor: I'm Willing to Bet a Million Dollars That It's Wrong

With Bitcoin recently surpassing $15,000, the famous bullish model - Stock-to-Flow Cross-Asset (S2FX) model is once again being discussed. However, this time two members of a crypto hedge fund have expressed negative views on S2F, believing that this prediction will ultimately fail, and have wagered $1 million as a bet.

S2FX Prediction Will Completely Miss the Mark

Eric Wall, the Chief Investment Officer of the cryptocurrency hedge fund Arcane Assets, stated today (11/12) on Twitter that he is willing to offer a $1 million bet that the price prediction of S2FX will be completely off by 2025. He first retweeted a confident tweet from the anonymous analyst PlanB, who invented the S2FX prediction model. In the tweet, PlanB pointed out:

Someone asked me if I have confidence in S2F. Let me clarify, I have no doubt that the S2FX prediction for Bitcoin to reach $100,000 - $288,000 in December 2021 is accurate. In fact, my latest research data confirms the fact that supply is even scarcer, and I believe 2021 will be remarkable.

People ask if I still believe in my model. To be clear: I have no doubt whatsoever that #bitcoin S2FX is correct and #bitcoin will tap $100K-288K before Dec2021. In fact I have new data that confirms the supply shortage is real. IMO 2021 will be spectacular. Not financial advice! pic.twitter.com/GNSxLIt7NG

— PlanB (@100trillionUSD) November 8, 2020

Eric Wall then stated:

I bet $1 million that S2FX will be completely off in the next five years, and this is not a joke. I am willing to entrust the bet to a third party we both trust, but you have to do the same. By "completely off," I mean that Bitcoin cannot even reach 50% of the price predicted by S2FX.

Not uncertain? I bet $1,000,000 that the S2FX model will be broken less than 5 years from now.

This is not a joke. I'm willing to lock up the money for it with a 3rd party we both trust, and you must too.

I define "broken" = "it won't have reached even 50% of its target range". https://t.co/vmDO5UkQoO

— Eric Wall (@ercwl) November 11, 2020

Wall also emphasized that he is not only betting against PlanB, but anyone with $1 million can participate on behalf of PlanB.

Stock-to-Flow Model

The Stock-to-Flow model (S2F) was first introduced by the anonymous analyst known as PlanB in March 2019, and it is a valuation model that estimates the future price of assets through quantitative scarcity.

The Stock-to-Flow Cross Asset model (S2FX) divides the different asset properties presented by Bitcoin in different periods into four stages. In addition to being applicable to Bitcoin, S2FX can also be used to estimate the prices of gold and silver, hence it is referred to as a cross-asset model.

BlockTower Capital: I Bet, But I Can't Lose

Another cryptocurrency investment firm, BlockTower Capital, has also taken notice of this bet. Ari Paul, the Chief Investment Officer of the firm, stated that he is willing to bet at 3:1 odds that the S2FX prediction will be off, but he believes this is an unwinnable bet. He pointed out:

While I can't comment on Eric's thought process for this bet, my reason for betting is simple - I don't even need to consider whether S2FX is accurate or not. This is a straightforward arbitrage. While betting, I also buy Bitcoin, so even if S2FX is correct, I won't lose the bet and incur losses. Therefore, I can't lose.

Paul emphasized that no one will bet against you, whether it's $1 million or $100,000, because there is an arbitrage opportunity, and PlanB has not responded much to this bet.