Nov 5, 2021

Letter #57: Bitcoin - Go With The Stock-to-Flow

Read now to learn how Bitcoin Stock-to-Flow proposes to predict Bitcoin’s performance in fiat terms.

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Joshua Guest
Your one-stop shop for Bitcoin education!
Episode details

Dear Readers,

The process of interpreting Bitcoin’s future price growth is, in many ways, enigmatic. People have tried and failed a lot over the years. Critics, of course, are the most representative group in this arena, having called Bitcoin worthless repeatedly while its price has skyrocketed instead. But even Bitcoin’s staunchest supporters find themselves at odds with one another when it comes to price predictions. If you spend enough time on Bitcoin Twitter for example, you’ll hear price predictions of $100k, $500k, $10 million, and everything in between.

Stock-to-Flow to the Rescue

While truly predicting the price is next to impossible, there is one pricing model that fared better than most for several years: the Bitcoin S2F model.

*Update: As of 2022, the Bitcoin S2F model is largely disregarded as it broke its parameters.*

Originally created by a pseudonymous financial analyst named “PlanB”, the model seeks to forecast Bitcoin’s long-term price growth by relying wholly on an analysis of Bitcoin’s stock-to-flow (S2F) characteristics.

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