Bitcoin Stock-to-Flow Model
So far, the most accurate model for predicting Bitcoin’s long-term price has been the stock-to-flow (S2F) model, first proposed by Twitter user PlanB in a Medium post.
The S2F is a ratio that shows the relationship between a commodity’s current supply and the amount produced in a certain period, like monthly or annually. It shows how scarce a commodity is, i.e., how much time it needs to achieve the current supply given the current output rate.
With Bitcoin, the S2F rate increases after each halving event, as does its price.
This model has been incredibly accurate, except for the ‘crypto winter’ in 2022, when it deviated to the bearish side. The cryptocurrency market lost tens of billions at the time, and many digital assets followed in BTC‘s footsteps.
