The chief information officer for the crypto quant fund Strix Leviathan compared the popular bitcoin stock-to-flow (S2F) model to astrology in terms making a price prediction.
In a post published June 30, Strix Leviathan’s Nico Cordeiro claimed that bitcoin’s S2F model was “fatally flawed.” Cordeiro labeled S2F as a “chameleon” in reference to Stanford professor Paul Pleifderer’s term for models built on “dubious assumptions” which receive more credit than they deserve.
The model’s accuracy will likely be about as successful at forecasting Bitcoin’s future price as the astrological models of the past were at predicting financial outcomes.
Cordeiro claimed S2F relies upon the assertion that the market capitalization of a monetary good, such as gold or bitcoin, is derived from a rate of new supply, which he says no evidence or research supports. The crypto quant exec also took issue with the model’s “naive” application of a linear regression, which would result in a high probability of finding “spurious results.”
The application of S2F to bitcoin was first introduced by the crypto analyst PlanB, who has gained a significant following on Twitter from fans of his model.
— PlanB 🔴 (@100trillionUSD) July 1, 2020
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