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Bitcoin’s predictive models, once hailed as near-prophetic, are now facing growing skepticism as market conditions evolve in 2025. For years, models such as the Stock-to-Flow (S2F), BAERM, and the Power Law served as crucial tools for forecasting BTC’s long-term value. However, analysts are increasingly questioning whether these models can still capture the complex interplay of institutional demand, macroeconomic policy, and evolving adoption trends that define Bitcoin’s present reality.
The Stock-to-Flow Model: Still Relevant or Losing Ground?
The Stock-to-Flow (S2F) model, introduced by the pseudonymous analyst PlanB in 2019, was one of the most influential frameworks for predicting Bitcoin’s price. It calculates Bitcoin’s value based on its scarcity, comparing the current circulating supply (stock) with the rate of new coin production (flow). Each halving event—when Bitcoin’s block rewards are cut in half—effectively doubles the S2F ratio, suggesting that Bitcoin becomes more valuable over time due to increasing scarcity.
According to the model, Bitcoin could reach a price of $222,000 by 2026 and potentially hit an astonishing $10.9 million within the next decade. These forecasts assume that scarcity remains the dominant force driving Bitcoin’s price appreciation.
Yet, critics argue that the S2F model’s predictive power is waning. André Dragosch, Head of Research for Europe at Bitwise, points out that Bitcoin’s market dynamics have evolved far beyond the simplistic scarcity-based framework the model relies on.
“The S2F model is undeniably bullish—but it overlooks key variables like institutional demand and macroeconomic influences,” Dragosch stated. “Bitcoin’s performance in recent years shows that scarcity alone doesn’t dictate price anymore.”
Indeed, Bitcoin has consistently underperformed against S2F’s projections since 2021. Analysts such as Kripfganz have argued that the model is “misspecified,” as the halving cycle itself introduces a time-dependent factor that violates traditional statistical assumptions. Residual analyses reveal non-stationary errors, implying that essential demand-side variables are missing.
A Market Dominated by Demand, Not Just Scarcity
Bitcoin’s ecosystem today looks vastly different from when PlanB first introduced the model. The rise of spot Bitcoin ETFs, large-scale institutional allocations, and corporate treasury holdings have redefined the supply-demand equation.
According to Dragosch, the annualized demand from institutions—via exchange-traded products and corporate acquisitions—now exceeds Bitcoin’s halving-based supply reduction by more than seven times. In other words, demand now plays a far greater role than predictable supply halving events in determining Bitcoin’s price.
This marks a fundamental shift: while the halving still reduces new supply, it no longer serves as the primary catalyst for price increases. Instead, the macroeconomic environment, investor sentiment, and liquidity conditions exert stronger influence.
The BAERM Model: A Balanced Alternative
In contrast to S2F, the Bitcoin Autocorrelated Exchange Rate Model (BAERM) takes a more data-driven approach. It measures how each halving impacts price using historical correlations, while also accounting for diminishing returns over time.
The BAERM model currently values Bitcoin’s “fair price” at $159,000, predicting it could reach $173,000 by the end of 2025 and potentially $7.59 million within ten years.
While less aggressive than S2F, BAERM boasts a historically strong correlation (around 88% R²) with Bitcoin’s price since the second halving. However, even this model may be falling behind the times. Dragosch notes that it doesn’t factor in institutional accumulation or shifting adoption patterns, which could both accelerate price appreciation.
“It also doesn’t account for a reacceleration in returns via an S-curve type of adoption pattern,” he said. “If you still believe in the halving’s importance, BAERM is the model to follow—but it’s not immune to obsolescence.”
The Power Law Model: Conservative but Consistent
Another prominent valuation framework is the Power Law model, which ties Bitcoin’s price to time using a logarithmic formula. It suggests that Bitcoin’s growth rate will slow as it matures—an assumption grounded in traditional technology adoption curves.
The Power Law has achieved an impressive 99% R² fit in historical data, but its forecasts are significantly more conservative than those of S2F or BAERM. The model projects Bitcoin reaching around $2.03 million in the next decade—far below S2F’s exponential predictions.
However, Dragosch points out that even the Power Law might need recalibration. “The rise of institutional demand challenges the diminishing returns hypothesis,” he argued. “Bitcoin’s adoption curve is reaccelerating as we move from early adopters to early majority investors. Traditional models underestimate this shift.”
Institutional Influence and a New Era of Price Discovery
The 2024–2025 period marked a turning point for Bitcoin’s structure. Spot Bitcoin ETFs, increased regulatory clarity, and macroeconomic shifts have brought a new wave of institutional participation that dwarfs the cyclical effects of halvings.
Data from Bitwise shows that institutional inflows into Bitcoin products have grown exponentially since the start of 2024, injecting billions into the market. This capital influx is reshaping price behavior, making traditional supply-side models less effective.
Meanwhile, Bitcoin’s correlation with equities and macro indicators—such as real yields and liquidity cycles—has grown stronger. This further weakens the premise that Bitcoin’s value can be forecast purely through on-chain metrics or halving-based scarcity models.
Are Bitcoin Price Models Obsolete?
While models like S2F, BAERM, and Power Law still provide useful frameworks for understanding Bitcoin’s long-term potential, investors must now view them as guidelines rather than predictions. Bitcoin has evolved from a niche digital asset to a globally traded macro instrument influenced by complex, interdependent variables.
Dragosch concludes that while traditional models retain historical value, the next generation of Bitcoin valuation tools must integrate factors like institutional demand elasticity, macroeconomic policy, and network adoption speed.
“Bitcoin has matured into an asset class driven by global capital markets,” he said. “Any model that ignores this transition risks becoming outdated.”
The Bottom Line
As Bitcoin approaches the next stage of adoption, investors must adapt their frameworks. While models like S2F offer a simplified view based on scarcity, the reality of 2025 is far more complex. Institutional flows, global liquidity conditions, and macroeconomic factors now dominate the narrative.
Bitcoin price models aren’t dead—but their reliability as precise forecasting tools is fading. For investors, the smartest strategy may lie not in relying on static models, but in understanding how Bitcoin’s evolving fundamentals reshape the very rules of valuation.
