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 the core basis of the Stock-to-Flow (S2F) model. When the Federal Reserve announces its first interest rate cut in September 2025 and institutional funds flood into the cryptocurrency market, this classic model for measuring asset scarcity once again demonstrates its foresight.
As of September 23, 2025, the price of Bitcoin on the Gate exchange fluctuates around $113,000, while the S2F model points to a more astonishing future: it could reach $275,000 by the end of 2026. 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. This model relates "stock" (existing supply) to "flow" (annual production), thereby measuring the degree of scarcity of the asset.
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 supply. The number of newly mined Bitcoins each year is not constant, but gradually decreases through the "Halving" event 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 traditional assets, Bitcoin’s S2F ratio is approaching the heights of rare resources like gold. Unlike gold, however, Bitcoin’s supply is absolutely limited and predictable, making its scarcity more pure and immutable.
02 Data verification, non-liquid supply exacerbates scarcity reality
On-chain data is enhancing the predictive power of the S2F model. According to Glassnode data, the current non-liquid supply of Bitcoin has reached 14.3 million BTC, accounting for over 72% of the total circulating supply.
These illiquid supplies are primarily controlled by long-term holders, many of whom have not moved their Bitcoins for over seven years. This means that the number of Bitcoins actually circulating in the market is far less than the theoretical supply. It is estimated that nearly 30% of Bitcoins have been lost, locked up, or have yet to be mined.
Exchange reserve data also confirms this trend. From November 2024 to May 2025, the number of Bitcoins held by centralized exchanges decreased by nearly 668,000 BTC. About 3,600 BTC flows out of exchanges daily, indicating that investors prefer accumulation over trading.
This shift in the dynamics of supply and demand is creating a structurally scarce environment. When demand increases, the upward pressure on prices is amplified due to the limited available circulating supply. Analysts at Fidelity Investments have pointed out that this trend may drive Bitcoin price Breakthrough historical highs, even exceeding 124,000 dollars.
03 Price Prediction, S2F Model Points to $275,000 Target for 2026
According to the analysis by Plan B, the creator of the S2F model, the current price trajectory of Bitcoin is marked in the "red to orange" area, indicating that we have just experienced a Halving event a year ago. Historically, the phase following a Halving tends to trigger a strong price rebound in the next 12 to 18 months.
The model predicts that based on the historical S2F pattern after Halving, Bitcoin is expected to experience exponential growth, potentially reaching around $275,000 by the end of 2026. This prediction reflects the core theory of scarcity in S2F, which states that each Halving reduces the issuance of new coins, thereby driving up the price.
The rainbow chart model corroborates with S2F, predicting that the price of Bitcoin may progress from the "FOMO zone" to the "Is this a bubble?" area over the next 18 months, advancing towards the range of $290,000 to $365,000.
Although these models provide a robust analytical framework, they do not take into account external market shocks or macroeconomic disturbances. However, the current Federal Reserve’s interest rate cut policy has created a favorable macro environment for Bitcoin, which may resonate with the predictions of the models.
04 Market Dynamics, Federal Reserve Interest Rate Cuts and Accelerating 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 such as Bitcoin, prompting more funds to flow into the cryptocurrency sector.
In the week following the interest rate cut, digital asset investment products saw 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 dollars, with BlackRock’s IBIT and Fidelity’s FBTC becoming the market leaders.
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 attracting more institutional capital.
Ledn’s Chief Investment Officer John Glover predicts that Bitcoin could reach between $140,000 and $145,000 by the end of 2025. Additionally, if liquidity remains abundant, a target of $200,000 is not out of reach.
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 view its limitations rationally. This model is primarily based on supply data and does not adequately incorporate changes in demand and macroeconomic factors.
For example, a sudden shift in Federal Reserve policy, changes in the global regulatory environment, or large-scale hacking incidents can have a significant impact on Bitcoin prices, which are difficult for the S2F model to capture. On September 22, 2025, Bitcoin briefly fell to a 12-day low of $114,270, triggering over $1 billion in liquidations. This short-term volatility highlights the unpredictability of the market.
In addition, when the price of Bitcoin rises sharply, some long-term holders may choose to take profits, increasing market supply. Reports indicate that by July 2025, as many as 80,000 long-term dormant Bitcoins may re-enter the market.
Nevertheless, the value of the S2F model lies in its capture of Bitcoin’s most fundamental value proposition: as demand increases, supply continues to decrease. This economic dynamic is likely to continue dominating Bitcoin in the long term. Price trend.
Future Outlook
As Bitcoin continues its journey post-Halving, the S2F model provides a framework for understanding its long-term value trajectory. While the model points to a target of $275,000 by 2026, the path of the real market is always fraught with twists and turns. Currently, the price of Bitcoin on Gate is about $113,000, situated at a critical intersection of technical and fundamental factors.
The decrease in exchange reserves, the increase in non-liquid supply, and the liquidity easing brought about by the Federal Reserve’s interest rate cuts have together created a rare bullish environment for Bitcoin. However, savvy investors will use these models as guides rather than absolute truths, while staying keenly observant of overall market dynamics alongside on-chain data.
