The supply of Bitcoin is limited, with a maximum of 21 million coins." This fundamental characteristic forms the cornerstone of Bitcoin’s value and is also the core basis of the Stock-to-Flow (S2F) model.
When Bitcoin hovers around $108,000 on October 23, 2025, the S2F model points to an even more astonishing future: it could reach $275,000 by the end of 2026.
This classic model for measuring asset scarcity once again demonstrates its foresight. This article will delve into the workings of the S2F model, the supporting current data, and how it corroborates with market realities.
01 The Cornerstone of the Model: Understanding the Framework of Bitcoin Scarcity
The core of the S2F model lies in predicting asset value by quantifying scarcity. The model associates "stock" (existing supply) with "flow" (annual production), thereby measuring the degree of asset scarcity.
For Bitcoin, its fixed supply cap is 21 million coins, while the "flow" depends on mining output. As of August 2025, over 19.91 million BTC have been mined, accounting for about 95% of the total.
The number of newly mined Bitcoins each year is not constant, but gradually decreases through an event called "Halving" that occurs approximately every four years.
After the last Halving, miners can only receive a reward of 3.125 BTC every 10 minutes. This regular reduction in the issuance mechanism makes Bitcoin increasingly scarce, and the S2F model captures this unique economic characteristic.
Compared to gold, Bitcoin’s S2F ratio is approaching the heights of rare resources like gold. Unlike gold, however, Bitcoin’s supply is absolutely limited and predictable, which makes its scarcity more pure and immutable.
02 Data verification, non-liquid supply exacerbates the reality of scarcity
On-chain data is strengthening the predictive capability of the S2F model. According to data from Glassnode, the current illiquid supply of Bitcoin has reached 14.3 million BTC, accounting for over 72% of the total circulating supply.
These illiquid supplies are mainly controlled by long-term holders, many of whom have not moved their Bitcoins for over seven years. This means that the actual number of Bitcoins circulating in the market is far less than the theoretical supply.
It is estimated that nearly 30% of Bitcoin has been lost, locked, or has yet to be mined.
Exchange reserve data also confirms this trend. From November 2024 to May 2025, the amount of Bitcoin held by centralized exchanges decreased by nearly 668,000 BTC. Approximately 3,600 BTC flows out of exchanges daily, indicating that investors prefer accumulation over trading.
This shift in the supply and demand dynamics is creating a structurally scarce environment. When demand increases, the upward pressure on prices can be amplified due to the limited available circulating supply. Analysts at Fidelity Investments point out that this trend may drive Bitcoin price Breakthrough historical highs, even exceeding 124,000 dollars.
03 Price prediction, S2F model points to a target of $275,000 in 2026
According to the analysis by Plan B, the creator of the S2F model, the current price trajectory of Bitcoin is marked as the "red to orange" zone, indicating that we have just experienced the Halving event from a year ago.
Historically, the Halving phase has triggered a strong price rebound in the following 12 to 18 months.
The model predicts that based on the historical Halving S2F pattern, Bitcoin will experience exponential growth, potentially reaching around $275,000 by the end of 2026. This prediction reflects the core scarcity theory of S2F, which states that each Halving reduces the issuance of new coins, thereby driving up the price.
The rainbow chart model and S2F corroborate each other, predicting that the price of Bitcoin may progress from the "FOMO zone" to the "Is this a bubble?" area within the next 18 months, moving towards a range of $290,000 to $365,000.
Although these models provide a powerful analytical framework, they do not take into account external market shocks or macroeconomic disturbances. However, the current Federal Reserve’s interest rate cut policy happens to create a favorable macro environment for Bitcoin, which may resonate with the predictions of the models.
04 Market Dynamics, Federal Reserve Rate Cuts and Accelerated Scarcity Effect of Institutional Funds
In September 2025, the Federal Reserve announced a 25 basis point interest rate cut, marking the first rate cut since 2023. This policy shift reduced the opportunity cost of holding non-yielding assets like Bitcoin, prompting more funds to flow into the cryptocurrency sector.
In the week following the interest rate cut, digital asset investment products recorded an inflow of $1.9 billion, with Bitcoin funds attracting $977 million and Ethereum attracting $772 million. The total assets under management reached a year-to-date high of $40.4 billion.
The increase in institutional participation is also reflected in the strong performance of Bitcoin spot ETFs. As of September 2025, the assets under management of Bitcoin spot ETFs have reached $219 billion, with BlackRock’s IBIT and Fidelity’s FBTC becoming the market leaders.
On October 22, the Bitcoin ETF market saw significant inflows again. Ten Bitcoin ETFs had a net inflow of 4,306 BTC (approximately $466 million), with BlackRock’s iShares showing the most outstanding performance.
The influx of institutional capital creates a virtuous cycle with the scarcity of Bitcoin: as more Bitcoins are purchased and locked by institutions, the circulating supply further decreases, driving up prices and subsequently attracting more institutional capital.
05 Challenges and Limitations, Rationally Viewing the Predictive Ability of the S2F Model
Despite the S2F model providing compelling Price Prediction However, it is crucial to rationally view its limitations. This model is primarily based on supply data and does not adequately incorporate changes in demand and macroeconomic factors.
For example, sudden changes in Federal Reserve policy, shifts in the global regulatory environment, or large-scale hacking events can significantly impact Bitcoin prices, which are difficult for the S2F model to capture.
The S2F model completely missed the situation of Bitcoin reaching $100,000 in the last cycle. This did not happen.
Vitalik Buterin believes this model has flaws. Adam Back, on the other hand, thinks it aligns fairly well with past data rather than being a crystal ball for predicting the future.
Some comments suggest that the mathematical model is overly simplistic. Linear predictions cannot capture the chaotic nature of the cryptocurrency market. Just because two things happen at the same time does not mean that one caused the other.
Nevertheless, the S2F model remains popular among investors in 2025, primarily because it is easy to understand and provides a clear analytical framework.
Future Outlook
Exchange reserve data paints a clearer picture of scarcity. From November 2024 to May 2025, the number of Bitcoins held by centralized exchanges decreased by nearly 668,000 BTC. Approximately 3,600 BTC flow out of exchanges daily, indicating that investors prefer to accumulate rather than trade.
As Bitcoin continues its journey after the Halving, the S2F model provides a framework for understanding its long-term value trajectory. While the model points to a target of $275,000 in 2026, the reality of the market is always full of twists and turns.
The current price of Bitcoin on the Gate exchange is approximately 108,000 USD, at a critical intersection of technical and fundamental factors.
The decline in exchange reserves, the increase in illiquid supply, and the liquidity easing brought by the Federal Reserve’s interest rate cuts have together created a rare bullish environment for Bitcoin.
However, savvy investors use these models as guidelines rather than absolute truths, while paying attention to on-chain data and maintaining a keen observation of overall market dynamics.
