Because this isn't the only factor affecting price. We can't view the halving in a vacuum.
Well, one might well think this is true.
The model has a R^2 coefficient of 95%.
This means that SF2 Allow you to explain 95% of the price of BTC, while the factors different from S2F only account for 5%.
So probably different factors are only temporary white noise (random news, only affecting the price in the short term) or a consequence of S2F (store of value, mass adoption, investment case).
This is why I think this model is a paradigm shift in the valuation of bitcoin.
PlanB analysed this objection in SLP #86:
PlanB: Yeah. I don’t know of course, but it’s an interesting point that the stock-to-flow multiple before we dive into that, let me say that the R-squared that I mentioned in the article, and that I mentioned just in the podcast, it’s not understood by everybody. So maybe I should talk a little bit about that. The R-squared is a goodness-of-fit measure. So it tells you how good the model fits the data, and an R-squared of, say, below 50 or 60% is not very good. It’s bad. It basically says there’s no fit. And a 100% R-squared means that you have a perfect fit, a perfect model, and you almost never see that because it’s a model. It’s not the reality. There is always some noise that disturbs it.
PlanB: So the 95% of the stock-to-flow model is really, really good. It shows that the relationship between stock-to-flow and value, and well the chance that it is caused by anything at all than stock-to-flow is close to zero. And a lot of people reject the stock-to-flow model because it doesn’t take into account things like demand or Forex and hacks, and economic news, and all that, but what would it add? It would only add like 5%, the missing 5%.
PlanB: We already have 95% good model. So in my opinion all those other factors even demand as important as it is, all those other factors are noise and stock-to-flow is the real signal that we have to keep focused on.
I had also heard Plan B say that he largely believe that the model supports a much higher price but he is sticking with a more conservative description, and even with all of that, I still doubt that assertions of 95% explanatory factor of historical results would mean that predictive capacity is 95% or that anyone should be investing in bitcoin in terms of expecting 95% odds of the price reaching $50k to $100k in the next year to 18 months.
In other words, there are forces with a lot of capital out there (banks and governments) that could have incentives and even means to attempt to cause the stock to flow model to be wrong in the short to medium term, even if they might not be able to negate it in the longer term.
I would think that anyone who is investing in bitcoin based on feelings of surity that even approach anything more than 50/50 regarding some of the future performance expectations of bitcoin, even using stock to flow, might be gambling way too much with their wealth, including the employment of leverage and practices like that might be justified if assigning too high of probabilities to future events... even if they might end up getting it right.
Don't get me wrong, I am quite content to have bullish models out there, like PlanB's, so I am not really consciously changing my BTC investment strategy, which might even be justified based on some of the seemingly attempts of greater certainty that seem to come from some of these kinds of charts that have decently high explanatory values regarding so far price performance and imply high value probabilities that the future will follow the models.
I am still sticking with my recommendations that anyone still not in bitcoin should be putting 1% to 10% of their available investment assets into bitcoin and NOT be engaging in risky behavior in that direction in terms of making sure that the rest of their cashflow and other investments are in order. I do understand that sometimes there are going to be younger people who are just getting started in investing and sometimes when just getting started, there might be some justification to start with one investment at a time, and maybe in those kinds of circumstances, they would put it in bitcoin while understanding that their investment in bitcoin remains risky.... while at the same time having some of this asymmetric bet aspect to it, as long as they are not leveraging and NOT investing more than they can afford to lose in terms of their own prudent and mostly non-leveraging budgeting justifications.
Also, regarding leveraging, don't get me wrong. I think that leveraging can be used to get rich faster than without it, but leveraging should only be used in conservative means in terms of not gambling with it, in my opinion, so it can be used to increase cashflow.. with very clear abilities to be able to pay it back without any major penalties or unreasonable rates....