Bitcoin Forum

Few articles have been so impactful on Bitcoin environment as the one from PlanB.
He tried to model Bitcoin valuation using Stock-to-Flow approach.
Stock-to-Flow approach is nothing new to financial world, it has long been used in physical commodities; it also was first applied to Bitcoin by Saifedean Ammous into his book "The Bitcoin Standard", as he used this approach to describe why Bitcoin is a "superior, harder money" when compared to commodities and FIAT money.
PlanB’s article has been published later than Saifedean’s book, but had a major impact: it was specifically oriented to determine Bitcoin Price and had a tremendous effect underlying the importance of halvings for bitcoin.

At the time of publication Bitcoin Price was around USD 3,400.

In this thread I will provide an explanation to some of misconceptions about this article, answering a few often posed questions, studying criticism to this model and some further development.


Link to original article:

Modeling Bitcoin's Value with Scarcity (https://medium.com/@100trillionUSD/modeling-bitcoins-value-with-scarcity-91fa0fc03e25)


https://pbs.twimg.com/media/EGMqpGpXUAETacO?format=png&name=4096x4096


31 Translations are already available, more will follow (I will add them here).

Arabic (https://bitcoinarby.wordpress.com/2020/03/07/planb-bitcoin/)
Armenian (https://medium.com/@Aklu/%D5%A2%D5%AB%D5%BF%D6%84%D5%B8%D5%B5%D5%B6%D5%AB-%D5%A1%D6%80%D5%AA%D5%A5%D6%84%D5%AB-%D5%B4%D5%B8%D5%A4%D5%A5%D5%AC%D5%A1%D5%BE%D5%B8%D6%80%D5%B8%D6%82%D5%B4%D5%A8-%D5%BD%D5%A1%D5%AF%D5%A1%D5%BE%D5%B8%D6%82%D5%A9%D5%B5%D5%A1%D5%B6-%D5%B4%D5%AB%D5%BB%D5%B8%D6%81%D5%B8%D5%BE-4b11d95f6217)
Bulgarian (https://medium.com/@georgikarov/%D0%BC%D0%BE%D0%B4%D0%B5%D0%BB%D0%B8%D1%80%D0%B0%D0%BD%D0%B5-%D0%BD%D0%B0-%D1%81%D1%82%D0%BE%D0%B9%D0%BD%D0%BE%D1%81%D1%82%D1%82%D0%B0-%D0%BD%D0%B0-%D0%B1%D0%B8%D1%82%D0%BA%D0%BE%D0%B9%D0%BD-%D1%87%D1%80%D0%B5%D0%B7-%D0%BE%D1%81%D0%BA%D1%8A%D0%B4%D0%BD%D0%BE%D1%81%D1%82-a09cbe922249)
Chinese  (https://mp.weixin.qq.com/s/Lj1313ND96unxcq98SNlMg)
Croatian  (https://medium.com/@LuxBTC/modeliranje-vrijednosti-bitcoina-na-temelju-njegove-rijetkosti-6538e31080c3)
Czech  (https://medium.com/@figyfaldaa/ur%C4%8Den%C3%AD-hodnoty-bitcoinu-na-z%C3%A1klad%C4%9B-jeho-vz%C3%A1cnosti-7c7a82a41f38)
Dutch (https://medium.com/@lekkercryptisch/modelleren-van-de-waarde-van-bitcoin-met-schaarste-e9a7418b5f3c)
Finnish (https://medium.com/brandin-kirjasto/bitcoinin-arvon-mallintaminen-niukkuuden-avulla-b352db42972e)
French  (https://medium.com/@PaulAdW/mod%C3%A9liser-la-valeur-de-bitcoin-gr%C3%A2ce-%C3%A0-la-raret%C3%A9-version-fran%C3%A7aise-dccfcb076839)
Frisian  (https://medium.com/@MyLegacyKit/de-wearde-fan-bitcoin-modellen-mei-knapperheid-41cafea7b06e)
German (https://medium.com/@david.andlinger.privat/modellierung-von-bitcoins-wert-mit-stock-to-flow-fe706e7eeac9)
Georgian (https://medium.com/@gelantiagio/%E1%83%91%E1%83%98%E1%83%A2%E1%83%99%E1%83%9D%E1%83%98%E1%83%9C%E1%83%98%E1%83%A1-%E1%83%A6%E1%83%98%E1%83%A0%E1%83%94%E1%83%91%E1%83%A3%E1%83%9A%E1%83%94%E1%83%91%E1%83%98%E1%83%A1-%E1%83%9B%E1%83%9D%E1%83%93%E1%83%94%E1%83%9A%E1%83%98%E1%83%A0%E1%83%94%E1%83%91%E1%83%90-%E1%83%A8%E1%83%94%E1%83%96%E1%83%A6%E1%83%A3%E1%83%93%E1%83%A3%E1%83%9A%E1%83%98-%E1%83%94%E1%83%9B%E1%83%98%E1%83%A1%E1%83%98%E1%83%98%E1%83%A1-%E1%83%92%E1%83%90%E1%83%97%E1%83%95%E1%83%90%E1%83%9A%E1%83%98%E1%83%A1%E1%83%AC%E1%83%98%E1%83%9C%E1%83%94%E1%83%91%E1%83%98%E1%83%97-97fd0177858d)
Greek  (https://medium.com/@GeorgeTProfit/ypologizontas-tin-axia-tou-bitcoin-vasei-spaniotitas-528ef80d7bf)
Gujarati (https://medium.com/translation-of-modeling-bitcoins-value-with/%E0%AA%85%E0%AA%9B%E0%AA%A4-%E0%AA%B8%E0%AA%BE%E0%AA%A5%E0%AB%87-%E0%AA%AC%E0%AA%BF%E0%AA%9F%E0%AA%95%E0%AB%8B%E0%AA%87%E0%AA%A8%E0%AA%A8%E0%AB%81%E0%AA%82-%E0%AA%AE%E0%AB%82%E0%AA%B2%E0%AB%8D%E0%AA%AF-%E0%AA%AE%E0%AB%8B%E0%AA%A1%E0%AB%87%E0%AA%B2%E0%AA%BF%E0%AA%82%E0%AA%97-fce5cf53bebf)
Hebrew (https://medium.com/@asheridan/%D7%90%D7%99%D7%9A-%D7%9C%D7%97%D7%A9%D7%91-%D7%90%D7%AA-%D7%9E%D7%97%D7%99%D7%A8-%D7%94%D7%91%D7%99%D7%98%D7%A7%D7%95%D7%99%D7%9F-%D7%91%D7%90%D7%9E%D7%A6%D7%A2%D7%95%D7%AA-%D7%94%D7%A0%D7%93%D7%99%D7%A8%D7%95%D7%AA-%D7%A9%D7%9C%D7%95-dcfb60bb5c43)
Hindi (https://medium.com/@pradeepatmaram/%E0%A4%AC%E0%A4%BF%E0%A4%9F%E0%A4%95%E0%A5%89%E0%A4%87%E0%A4%A8-%E0%A4%95%E0%A5%80-%E0%A4%B8%E0%A5%80%E0%A4%AE%E0%A4%BF%E0%A4%A4-%E0%A4%89%E0%A4%AA%E0%A4%B2%E0%A4%AC%E0%A4%A5%E0%A5%80-%E0%A4%B8%E0%A5%87-%E0%A4%89%E0%A4%B8%E0%A4%95%E0%A5%87-%E0%A4%AE%E0%A5%82%E0%A4%B2%E0%A5%8D%E0%A4%AF-%E0%A4%AA%E0%A4%B0-%E0%A4%AA%E0%A5%8D%E0%A4%B0%E0%A4%AD%E0%A4%BE%E0%A4%B5-136eda7b1bbe)
Indonesian  (https://medium.com/cryptowatchasia/menghitung-nilai-bitcoin-berdasarkan-sifat-kelangkaannya-cd00d8c6c59f)
Italian  (https://medium.com/@carloclerici/il-concetto-di-scarsita-nella-determinazione-del-valore-di-bitcoin-c716c0ad3fff)
Japanese  (https://medium.com/@leriansfield/%E5%B8%8C%E5%B0%91%E6%80%A7%E3%81%AB%E5%9F%BA%E3%81%A5%E3%81%84%E3%81%9F%E3%83%93%E3%83%83%E3%83%88%E3%82%B3%E3%82%A4%E3%83%B3%E4%BE%A1%E5%80%A4%E3%81%AE%E3%83%A2%E3%83%87%E3%83%AB%E5%8C%96-f060486f2508)
Korean  (https://medium.com/@soulbitcoin1209/%ED%9D%AC%EC%86%8C%EC%84%B1%EC%9D%84-%ED%86%B5%ED%95%9C-%EB%B9%84%ED%8A%B8%EC%BD%94%EC%9D%B8-%EB%AA%A8%EB%8D%B8%EB%A7%81-modeling-bitcoins-value-with-scarcity-942ceb287d5b)
Norwegian  (https://kryptografen.no/2019/07/16/knapphet-bestemmer-verdien-pa-bitcoin/)
Persian (https://arzdigital.com/modeling-bitcoins-value-with-scarcity/)
Polish  (https://medium.com/@ztzawislak/modelowanie-warto%C5%9Bci-bitcoina-za-pomoc%C4%85-rzadko%C5%9Bci-739316b6e18a)
Portuguese (https://medium.com/@mmouta/modelo-matem%C3%A1tico-do-valor-da-bitcoin-com-base-na-escassez-4846c5d3f3f1)
Romanian  (https://medium.com/@AndreiStroescu1/evalu%C3%A2nd-bitcoin-bazat-pe-raritatea-sa-2ff052d7c44a)
Russian  (https://medium.com/@Tony_B/%D0%BC%D0%BE%D0%B4%D0%B5%D0%BB%D0%B8%D1%80%D0%BE%D0%B2%D0%B0%D0%BD%D0%B8%D0%B5-%D1%86%D0%B5%D0%BD%D0%BD%D0%BE%D1%81%D1%82%D0%B8-%D0%B1%D0%B8%D1%82%D0%BA%D0%BE%D0%B8%D0%BD%D0%B0-%D1%81-%D1%83%D1%87%D0%B5%D1%82%D0%BE%D0%BC-%D0%B4%D0%B5%D1%84%D0%B8%D1%86%D0%B8%D1%82%D0%B0-3fcb10890999)
Slovenian (https://medium.com/@thepkbadger/modeliranje-vrednosti-bitcoina-na-osnovi-redkosti-7197ccdaf36c)
Spanish (https://medium.com/@jsanzsz/valorando-bitcoin-en-funci%C3%B3n-de-su-escasez-9828dd9c197)
Swedish (https://medium.com/@w134386/modellera-bitcoins-v%C3%A4rde-med-knapphet-653049098e6c)
Turkish (https://medium.com/@oguzhu12/bitcoin-de%C4%9Ferinin-nadirlik-ile-modellenmesi-965d07b0fcda)
Vietnamese (https://news.bitcoinvn.io/mo-hinh-dinh-gia-bitcoin-stock-to-flow/?__cf_chl_jschl_tk__=0faab2e0a640c8beb336482b47546fb10c637aa1-1583587529-0-AfGOQ80zn1S8wPuEIkrD4mmHxI18d9lMNukecx7ew4bf-0rHjoXq60A35WdjONHRqVeRD_uBrOxDAnh4q_i8fJEZ5k7iehsWq_2OhWGscun6sZDOS9JVr4v5r0Q9MQqk6ZL4i8c7XMVxRpY3LA2xc8LdQVials8cXvO9YokE84VZurKYT6ezk8kntjt5RJ6b3KSTcII2tc-bevHawjIG0m7ib9fQHLQGapVOWAHzXc3gQxdLhELirRXRIOwNEQscXkTu2fAknfovH29wHgfisuuqdQOgwI_vlLrrbMkDolXI2jk76AhcBglMHL5ILMwYFjUWIaUWhymBR9S0guo1N1nMOOKY5vHQ4S-noLHmRPKwZkkQXjBSO8uQLDR27yZikA)


Live Stock-to-Flow Price:
Bitcoin Stock-to-Flow model live chart (https://digitalik.net/btc/)

https://talkimg.com/images/2023/05/16/bloba2e8aaa259d37a8e.jpeg

Live Stock-to-Flow dashboard:
Bitcoin SF Analysis (https://public.tableau.com/profile/hansolar#!/vizhome/BitcoinSFAnalysis/BTCValueSFModel?publish=yes) by @hansolar21

https://talkimg.com/images/2023/05/16/blob17e576c19186e699.jpeg

F.A.Q.

There are a lot of questions about the Stock-to-Flow Model. Many of those have already been answered in the many podcasts (reference after the answer). I will copy here the most recurring ones, I will use PlanB’s words to describe the answer, adding some considerations of mine in case it's required.


Q1.

A1.
SLP67


Q2.
A2.
SLP67



Q3.

A3.
SLP86

A few SF graph for altcoins: clearly there's a lack of correlation (and cointegration) between SF and value:

https://pbs.twimg.com/media/D8itSoMXYAA3tNw?format=png&name=900x900

https://pbs.twimg.com/media/D8itUJBXkAAmtT_?format=png&name=900x900

Q4.

Quote

Stephan Livera: Yeah, it’s fascinating stuff. And this table that you’ve got, so you think, so just for the listeners, it’s showing the year, the halving, and the model predicted price. So as you said 50,000, 400,000, and then 3.2 million for the 2028 halving. Now, to the extent that stock-to-flow modeling works, so again caveat, this is not economic law, it’s some sort of modeling, but to the extent that the modeling works. Do you have any reflections on how many cycles we could anticipate this working for?

A4.

Quote

PlanB: Yeah, that’s also a discussion on Twitter, lots of questions about exactly this infinite value if you wish. If you follow the table, we could go all the way to 2140 when the flow is zero, when there’s no more new bitcoins, only fees. And the theoretical value how to Stock-to-Flow model would be infinite. So how can that be? And basically I think this is a very theoretical argument. And I’m a very practical guy. So if I look at the next three halvings alone. So we’re now at, say, 100, $200 billion market. Every halving this market goes 10X. So after 2020, we go to one trillion, after ‘24 we go to 10 trillion. And after ’28, so the third halving we go to a 100 trillion US dollars, hence my name, my Twitter handle.

PlanB: I think that we don’t have to wait until 2140 before the model breaks or before something breaks. I think we’ll be there sooner than we think. I think we’ll be there well, maybe 24. Somewhere between 24 and 2028 because 10 to $100 trillion Bitcoin market that’s enormous if you compare it to the US dollar for example. It has a monetary base of three trillion, and I think an M2 of about 12 or 14 trillion. So then that means that somewhere between 2024 and 2028, bitcoin is bigger than the US dollar. It basically means the US dollar will die, and we’ll be measuring things in Bitcoin.

Stephan Livera: Very bullish.

SLP86

Here the image detailing what they were referring to:

https://pbs.twimg.com/media/EAjO7XrXUAAwh-u?format=png&name=small
 Twitter link (https://twitter.com/100trillionUSD/status/1155400826002771968?s=20)


When Satoshi picked the 21 millions as the total cap to BTC supply made some assumptions on the total money supply, and figured out that if this limit was equalled by Bitcoin, then a satoshi, the minimum unit of bitcoin, a would have been worth a singe cent, the minimum practical unit of account. This backwardly then implied a single bitcoin would have been worth one million. (Hal Finney (https://www.cryptopolitan.com/hal-finney-bitcoin-price-prediction-10-m/) was involved into this choice)
For Bitcoin to appreciate beyond this limit of course we need the dollar to lose value: beyond a certain level it is not bitcoin appreciating, it's dollar losing value in real term. When bitcoin will be at 3,200,000 USD maybe a liter of milk will be at 50 USD: we will be measuring the prices with a shorter and shorter meter.

Stock-to-Flow model independent review:

• Quantifying Uncertainty In The Bitcoin Stock-to-Flow Model (https://e-string.com/articles/bitcoin-stock-to-flow-uncertainty/)
  
  Quote
  The linear regression of the log of the values seems reasonable but the uncertainty (variability / error) large enough, especially when brought back to a linear scale, that it makes it difficult to make useful specific predictions. Then again, that alone is useful information.
  
  
  
• Falsifying Stock-to-Flow As a Model of Bitcoin Value (https://medium.com/@phraudsta/falsifying-stock-to-flow-as-a-model-of-bitcoin-value-b2d9e61f68af)
  
  
  Quote
  This article explores if there is a stock-to-flow relationship to Bitcoin value. The proposed log-log model is tested for statistical validity against the least squares assumptions, for stationarity in each variable and for potential spurious relationships. A Vector Error Correction Model (VECM) is built and tested against the original stock-to-flow model. Whilst some of these models out-compete the original model in terms of Akaike Information Criteria, all of them fail to reject the hypothesis that stock-to-flow is an important non-spurious predictor for the value of Bitcoin.
  

Podcasts where PlanB discusses his article:

• What Bitcoin Did: Plan₿ on Bitcoin’s Stock-to-Flow (https://www.whatbitcoindid.com/podcast/plan-on-bitcoins-stock-to-flow)
• Stephan Livera Podcast #86 PlanB – Frontrunning the Bitcoin Halvening? (https://stephanlivera.com/episode/86/)
• Stephan Livera Podcast #67 PlanB – Modelling Bitcoin digital scarcity through Stock-to-flow Techniques (https://stephanlivera.com/episode/67/)

Stock-to-Flow appearances in other contexts:

• State-Backed German Bank Says Bitcoin Will Leap to $90,000 in 2020 (https://cointelegraph.com/news/state-backed-german-bank-says-bitcoin-will-leap-to-90-000-in-2020)
  
  
  Quote
  The German bank BayernLB has published a report on Bitcoin (BTC) versus gold, in which it predicts a big leap for the cryptocurrency in 2020.
  
  Bitcoin outshining gold?
  On Oct. 1 the Munich-based, state-owned bank published its latest research report that seems to suggest that the forthcoming Bitcoin halving effect is yet to be factored into its current price of about $8,300.
  
  The financial institution explained that gold had to earn its high stock-to-flow ratio “the hard way over the course of millennia.” Bitcoin on the other hand will most likely succeed to obtain a similar stock-to-flow ratio to that of gold in the coming year, the report predicts.
  
  Direct link to research paper:
    Is Bitcoin outshining gold? (https://www.bayernlb.com/internet/media/ir/downloads_1/bayernlb_research/megatrend_publikationen/megatrend_bitcoins2f_20190930_EN.pdf)
  
  

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This post is eligible for my project:

Help me translate my best posts in your Local Board (https://bitcointalk.org/index.php?topic=5230761.msg53972826#msg53972826)

Quote

I am a strong believer in the utility of local boards.
I am lucky enough to be able to express myself in at least a couple of languages, but I know this is not the case for everyone.
A lot of users post only in the local boards because of a variety of reasons  either language or cultural barriers, lack of interest or whatever other reason.
I personally know a lot of very good users (from the italian sections mainly, for obvious reason) who doesn't post in the international sections.

I think all those users they are missing a lot of good contents posted on the international (english) section or on other boards.

If you think you can help here, just visit the thread!

Wasn't a German bank last week also using a stock to flow model to relate the hardness of Bitcoin (in comparison to the hardness of gold). Saw the piece of news trawling the usual sites a few days ago, but it headlined with a $90k valuation by May 2020, so yeah, maybe needed a lot of tweaking. The researchers did admit they hadn't priced in halving though, but I fear to see what 6-figure digit that would have brought up to surface!

this news here? --> https://cointelegraph.com/news/state-backed-german-bank-says-bitcoin-will-leap-to-90-000-in-2020

Well this is excellent! I never thought this modelling value of Bitcoin. Anyone not interested in the text here and want's to understand this video can watch this youtube video right here
https://www.youtube.com/watch?v=1VSqBxPi4Ww (https://www.youtube.com/watch?v=1VSqBxPi4Ww)

It beautifully explains that article from where OP got the idea of this modelling. So basically if we look upon this ideology Bitcoin currently is overpriced but the current prices also include the effect of the forces of demand and supply so price seems genuine to me. But more importantly soon it can be much more expensive than Gold as an asset.

Finally something new and worth to read. I'm not familiar with this "stock to flow" in Finance. Let's see what this is about:

Oh, it's basically a measure of scarcity, by looking at the "world inventory" and the amount produced annually.
https://monetary-metals.com/gold-economics/lexicon/?mmdesc=stock-to-flow-ratio#stock-to-flow-ratio

This model should suffice for an academics paper (at least in my country). However, it might not get an accurate result for forecasting. It still utilizes historical data, right?
For forecasting purposes, however, this model can be used as one out of many models and assumptions.

The good news is, as Satoshi said, if you can get enough people to believe this model, it will be a self-fulfilling prophecy.

Good news is: somebody already thought of it, and tested.

Actually the author himself did it.

What if, instead of using all the available data to fit the model, we use only the Oct yearly Data on 2009-2012 (4 points), so before the first halving? We use those 4 points  we fit the model and then we compare it with the actual data 7 out of sample data points (Oct 2012- Oct 2019).

The result is the following:

https://pbs.twimg.com/media/ED3ha7oXoAAg6pJ?format=png&name=4096x4096


https://twitter.com/100trillionUSD/status/1151952837607342080?s=20


99.5% means there's no chance the model is wrong about the correlation.

Another great fillippone thread, would sMerit but out, so a 1000 virtual merits to you sir.

And I thought there is nothing new to learn about trading cryptocurrencies. Thanks, I bookmarked 100trillionUSD's medium post for further study. It was always in the back of my mind that stocks/securities have price to earning ratio while cryptocurrencies obviously doesn't have one and what metric could be  applied to coins in a similar fashion.

@fillippone thanks for the serious response.

In the time series analysis, you can divide the period into (1) in-sample period and (2) post-sample or out-of-sample period. I have no problem with the (1) in-sample period if the model is statistically significant. In this case, the Stock To Flow Model can be presented and discussed to underline the scarcity, halvings, as you said, but only for 2009 - present (up to the model generated).

This post https://bitcointalk.org/index.php?topic=5191012.msg52693516#msg52693516 also about the in-sample period or in-sample forecast.

For forecasting (let's say 2020 or 2025), we deal with (2) the post-sample period. This is when "uncertainties" come to play. If every relationship stays the same, we can expect that this model can accurately predict future BTC prices. However, in economics, that's not possible since the world is continuously changing.

Suggested reading:
https://stats.stackexchange.com/questions/260899/what-is-difference-between-in-sample-and-out-of-sample-forecasts
https://people.duke.edu/~rnau/three.htm

In the attached post:
In-sample size is 4 (yearly October Data 2009-2012 - before first halving).
Out of sample size is 7 (yearly October Data 2013-2019 ).

This model was only deemed to show that with only 4 data you already get the stock to flow dynamics and you can correctly predict 2019 prices using only 2009-2012 data!

It is a different model from the full model that took in account I believe 111 monthly data points between 2009 and 2019 (r2 is also different).

Okay, then you have a good case about this model's ability to forecast.
However, careful about "overfitting" and let's see about it in the next few years :)

Again, the author explored this possibility, and found some nice evidence:


https://pbs.twimg.com/media/D-9sLXCXYAAcmt1?format=png&name=large

https://twitter.com/100trillionUSD/status/1148255654051794944?s=20


As you can see, taking different subset of sample points, doesn't change dramatically the model: hence overfitting hypothesis can be safely discarded.
This is very important, imho, you were right pointing to this as a potential invalidating point for the model, but this can be safely dismissed.

Thanks! I have put your findings here on my local board.
https://bitcointalk.org/index.php?topic=903836.msg52711931#msg52711931

You did an excellent job presenting the proof and discuss humanely. I like it when people don't get triggered or rude when challenged. I don't have a problem with the model, but at the same time, not saying that the reality will conform to the model. That's what skeptics do ;D

Thank you.
I like to discuss this model, because I am desperately trying to find a reason why it fails.
Because otherwise it's too easy to make money on the back of this!
So any doubt is welcome, as allows me to better understand the model itself.
The consequences of this models are imho, beyond our understanding (getting to a BTC valuation of millions is going to break many things).

The last time I saw this model, I noticed that it just approaches infinity as Bitcoin's stock flow  approaches zero, so obviously it will break at some point - https://bitcointalk.org/index.php?topic=5183373.msg52414987#msg52414987

The author also realizes it, judging from his Q4 in your OP, so really it's just a question of how soon this model will break - in a few years, in 4-8 years, or maybe it has already failed?

https://imgs.xkcd.com/comics/extrapolating.png

This is a very interesting question.

First of all, also thank you for letting me know that someone already opened a thread on the same article, I searched on the forum, but I wasn’t able to find it, so I will write a comment also there.

Then a little typo you made: SF go to infinity because the FLOW goes to zero, not the stock, which instead goes asintotically to 21 millions.

Lastly, the author recognise that BTC cannot go to the millions without something breaking. But the point is it’s not the model to break, but the numeraire of the model, the unit of measure of the model, I.e. the dollar!
As I wrote above it’s not the BTC gaining value versus the dollar, it will be the dollar losing value versus everything.

Regarding the possibility the mode has already failed: negative. Actual BTC  price is still well in line with the model price, so it still working.

Don't worry, your thread is much deeper, so it shouldn't count as a duplicate.


I don't get how a model based on Bitcoin's supply can predict that the US dollar would lose so much value that it would actually spiral into a Zimbabwe-like inflation. Despite Bitcoin being a huge part of my savings, I would actually hate to see it happen, as it would mean a disaster for global economy.

I'm always wondered why people are applying some mathematical models, stocks signals and so on on a very very speculative active like Bitcoin?!
It was interesting to read... as fiction. It's pointless. People see a 100M transaction and the price is dropping 10%. By pure speculations.

IMO articles like OP are irrelevant to the Bitcoin and other altcoins where prices are driven by specula and specula only.

Very well, mate.
I don't see economics-related discussion on this thread, the question is, do tech enthusiast here learn economics?

1. The Assumption
Let's see about the equation
Price = 0.4*SF^3 translate: constant*SF^constant, the author is saying that the only variable matters in price/value discovery is Stock-to-flow. This is conceptually wrong since many things affect the price/value discovery. What if the world economy is in a recession? Is it a coincidence that there is no global recession in the past ten years.

Is it make sense to include: economic growth, inflation rate, risk-free rate?

2. Model fit data or Data fit model?
Ideally, the researcher changes the models to fit the data. However, it's often difficult without "data treatment." Thus, in my limited observation, researchers tend to do the opposite, transforming the data to fit the model.

I'm one of the "don't transform your data" kind of guy.

3. Real-world problem
The data capture real-world dynamics up to 2019 (assumed that the market is efficient). Therefore, if the researcher creates a model about it, he will find a model that captures the dynamics, well... up to 2019. The dynamics will certainly change in the future, thus making the model invalid for forecasting.

I will try to answer all your question, limited to my understanding of the model.



Model R^2 is 95%: the model has a correlation of 95% with actual data. All other factors than SF, speculation included have an impact on the BTC valuation, but they account only for the residual 5% of the value. So, including them in this model (how?) only increases the forecasting capabilities of 5%. I think we can agree it's not worth the effort.
Regarding BigBoy89 observation I would add that the above consideration is for Bitcoin only. For altcoins I don't knwo what is driving the price, not SF for sure.

 
All the data are publicly available and open to scrutiny on PlanB github (https://github.com/100trillionUSD/bitcoin). material errors have been found in the past, and author has been ready to adjust his model accordingly 8e.g. Silver stock to flow).
 


As I showed above, analysing data before the first halving , data collected in 2009-2012, correctly predicts price in 2019. Of course dynamics can change after 2019, but I guess that if it held during the wild ride from zero to 10K, it is probably going to stay strong in the future.

Another tweet by PlanB detailing the Power Law Relationship:

https://pbs.twimg.com/media/EGyiGtOX0AE2kZv.png

https://pbs.twimg.com/media/EGyiGtvXYAUTIye.png

https://twitter.com/100trillionusd/status/1183499046935322624?s=21

https://pbs.twimg.com/media/EG_ig7mW4AAk_JG?format=png&name=900x900

https://twitter.com/100trillionusd/status/1184414286292160513?s=21

I think 2020 halvening will unfold differently from the pas ones, so I think it is hard to expect price to follow exactely the same part of 4 years ago.
The thing is that given the fact that PlanB published his work, a lot more people is looking at halvening, and the impact it is having on price via the SF ratio.
Lot of more professional investors are now in the arena, compared to 4 years ago.
So I would expect more people actually buying before the halvening, hence the post halvening bull run should be front run with a pre halvening bull run.
So, next months are critical!

Positive way of thinking: halving is not priced in yet: you can bargain BTC now!
Negative way of thinking: halving is priced in and there won’t be any rally for four years. Model has failed.

This is the big bet for 2020: if we will not have a very strong bull run, at later 12 months after the halvining thane the model will have failed. And this is going to push the price lower almost forever.
Otherwise brace yourself for moon.

So. Um. TL;DR = 2023 $100k, 2028 $1m ? And some numbers in between. More or less.

fillippone, I've been looking everywhere on the posts of PlanB - his tweets, his Medium posts. There was a prediction that sometime before or after the halving in May next year, he predicted the BTC price will be $50,000. Could you explain in layman's terms how he arrived with that number?

An image is worth a thousand words.

https://pbs.twimg.com/media/EAjO7XrXUAAwh-u?format=png&name=small
 Twitter link (https://twitter.com/100trillionUSD/status/1155400826002771968?s=20)

Every halving multiplies BTCUSD by a factor of 8.


He noted that there is a correlation, a very high correlation, between the Stock to flow ratio and price. Stock is the total of Bitcoin ever mined, flow is the Bitcoin production via flow. This relationship holds since 2009-2012(even before first halving, and still valid today), and never overshoot price of more than 100% (price was neve below 50% of model value) and never underestimated more than 300% (price was never 3 time bigger than model price). So it was a little bit conservative.
If you put model parameters into the SF at halving in May 2020 you get a price of 50,000 BTCUSD. As simple as that.
 

So if I understand that correctly then we can bound the table s.t. next halving could see price as low as $25,000 and not quite as high as $150,000?

Correct.
Of course all due and usual disclaimers apply.
Not financial advice, DYOR....etc.

Sure, no worries, not planning buys or sells based on this, just trying to understand the model assumptions and bounds.

No need to over think it. Just buy and buy until you can't. In 10 years, BTC is worth $3.2m... If it's less, that's still not so bad, but it will probably be higher than what ever price you buy today.

So, did some napkin math and it looks like, more or less, doubling every year.

2020    $50,000.00
2021~2022    $100,000.00
2022~2023    $200,000.00
2024    $400,000.00
2025~2026    $800,000.00
2026~2027    $1,600,000.00
2028    $3,200,000.00

The model definitely leans to the conservative side. It's limiting in the same way the historic logarithmic trend is. BTC may end up bucking both trends for that reason because they don't account for the possibility that adoption will follow an S curve. (https://en.wikipedia.org/wiki/Diffusion_of_innovations)

Chances are that price won't keep neatly following these patterns. Once patterns become too obvious, markets begin front running them, so these price dynamics may accelerate over time ahead of the stock-to-flow ratio.

I agree with concepts of not to overthink, and to just buy.. in a kind of dollar cost averaging way.. but frequently there does take some thinking to figure out how much you can buy without gambling or overextending yourself.



That is pretty optimistic, and it could happen.  However, the beginning portions of an exponential curve (if we are in one) might look different than later portions.  Furthermore, it is probably a lot more prudent to have a conservative range, including both starting from current price, and even if you are projecting up to also have some conservative numbers.  

By the way, your starting point seems to be both high numbers and using ATH from 2017 as your starting point, so even your numbers should be more conservative if they go from a more reasonable starting point, such as current price, but I will note that if you count every year, a 2x every year still does get us much above $3.2 million in 10 years.


Here's an illustration of a few differing scenarios of varying steady appreciation:


yearly/%  6%      50%      100%        150%
2019      $8,000   $8,000     $8,000        $8,000
2020      $8,480   $12,000     $16,000        $20,000
2021      $8,989   $18,000     $32,000        $50,000
2022      $9,528   $27,000     $64,000        $125,000
2023      $10,100   $40,500     $128,000     $312,500
2024      $10,706   $60,750     $256,000     $781,250
2025      $11,348   $91,125     $512,000     $1,953,125
2026      $12,029   $136,688     $1,024,000  $4,882,813
2027      $12,751   $205,031     $2,048,000  $12,207,0 31
2028      $13,516   $307,547     $4,096,000  $30,517,578

You can see from these charts that even conservative estimates gives you decent returns, and probably more realistic prediction tables would show a tapering off of the amount of the annual return rather than keeping the annual return as a constant through the next 10-year period.

I followed the picture and the other numbers from this thread and just extrapolated the years in between. In any case, the next ten years is going to be interesting. Anyone who gets anything between 0.1 to 10 BTC is going to experience some changes if he HODLs until the end.

Now, if only I can accelerate acquiring bitcoins ... that's another story.

This is exactly the reason why I am putting so much effort into studying this model and spreading it: it’s a low hanging fruit, if only you can see it!

This interview Might be very interesting.
It’s behind a paywall, but they give 14 days trial free of charge.


https://twitter.com/realvision/status/1185245355061010437
 

https://talkimg.com/images/2023/05/16/blob36b6e48b6926f732.jpeg

I was just reading an old post from Hal Finney, and even at bitcoin's inception (version 0.1) he already thought that bitcoin could be worth $10 million. Per coin. That was 10 years ago.

So $3m or $4m, might be possible in the next few decades (hopefully sooner, but I don't mind if it takes longer.)

Actually you know the total amount of bitcoin (21,000,000) was engineered regarding the total world M2: if the bitcoin was successful 21 million bitcoin would equal the total capitalisation of major fiat money, with a Satoshi worth 1 cent of usd (minimal practical unit of account).
You had to have great minds to think about this 10 years ago.

No it was arbitrary and coincidental. eg https://thenextweb.com/hardfork/2019/07/08/heres-why-satoshi-nakamoto-set-bitcoin-supply-limit-to-21-million/

Regarding the stack exchange expalination, I see a circular reference: he could have adjusted block reward to get different total amounts. What if started with 100 BTC as first reward? Or 60? We would end up having different maximum number of bitcoins. So it might be a miscalculation, or a little bit of luck, or a mi tire of the two, but I don’t buy the stack exchange post as an explanation on WHY 21 millions, rather than HOW...
So

Satoshi had time to calculate the genesis block and mine. Some say there were even testnets before the mainnet and before the testnets we have now. So there was probably time before the launch of version 0.1 to crunch some numbers and arrive at 21 million coins. You could run simulations for any number of coins per block, and when block rewards cut in half (or cut in thirds, or percents, or any other reduction.)

With alts, we see devs experimenting with different reward reduction schemes, different block times, and as we are all aware even different maximum block size limits. Litecoin has 2.5 minute blocks ... some coins reduces every month by 3% until it's 3 coins after 3 years (or something like that, that was the old tagcoin, which started at 30 coins reward per block.) We've seen different supplies from 1 million to 100 million, to even 10 billion coins. I even heard of a coin called 42, which would have only 42 coins as its max supply, so everything would practically be a decimal or fraction, probably with the idea that the smallest unit 0.0000 0001 (which would be called a satoshi in bitcoin) would have some higher value, if it's only pair was BTC.

But then exchanges started pairing other alts with other alts as well, not just BTC, so there is the LTC market and the DOGE market. Once your coin dropped below 1 sat, you ended up in the LTC or DOGE markets and your coin would never recover no matter what kind of alt-season happened.

Anyway, at least four variables could have been manipulated (or calculated): average block time, when halving (how many blocks), what reduction, and what genesis block and first reward era started with. It's very possible to have started with 100 BTC as first reward, but then halving happens more often (like every 2 years) and adjust all the others to still end up with 21 million or close to it.

I believe in the model. Plan B laid out some great work and his first round of numbers had inaccuracies and he has since corrected them. i.e. His Silver above ground numbers came from Wikipedia and were incorrect. He is looking for inaccuracies just like those of us in this thread. I can't find any fault with his paper on Medium. Sure, there are some tiny nit picks but taken as a whole, and I do mean 99% of what he published, is on the money (as best one can tell from today).

When the halving occurs, the reward is cut in half. The price of one bitcoin must increase for current margins to remain the same.

I think the questions we need to answer are:

• What BTC price point can any mining farm continue to operate at a profit when the reward is cut in half?
• How fast will the price of bitcoin rise after the halving? <- I'm optimistic. ;)

I see miner equipment having to last longer to pay for itself. Margins can't take too big a hit without companies deciding not to mine. Thinking through these problems using common sense tells us unless everyone shuts off their miner, the price is going up and Plan B's model is the best model I've seen to date.

Good work to the OP for bringing this up. I thought it was telling about the price of a liter of milk if bitcoin goes moon. A good way to think about this problem in tangible terms. Inflation of currencies will continue to happen.

New addition to real time Stock to Flow graphics:

 Daily updated charts of Bitcoin's stock-to-flow vs price (https://s2f.hamal.nl/s2fcharts.html)


https://talkimg.com/images/2023/05/16/blobbb22012935b456d7.png

Pretty standard implementation at first:


There is a nice addition:


So IF the error of the price is distributed as a normal around the model price, it should be inside the dark blue band for the 68% of the time, inside the light blue area for the 95% of the time (learn more here) (https://en.wikipedia.org/wiki/68%E2%80%9395%E2%80%9399.7_rule#targetText=For%20an%20approximately%20normal%20data,deviations%20account%20for%20about%2099.7%25.).

Very nice thread found on Twitter:


https://twitter.com/felipether/status/1188814540802318337?s=21


Lot of elaboration and mumblings  SF model, clarifying many things: do you know the difference between correlation and cointegration?

New Pocast is out:

https://stephanlivera.com/episode/122/


Listening to this pearl.
Will provide transcript of any relevant part.

EDIT: too many good parts. This post is going to be kilometric.

Somebody on this forum suggested that I post my recent paper on this thread. Here it is in three formats, jpeg, pdf, and Medium.com. To summarize what the paper is about: make plan B's market value vs S/F regression but with daily data instead of monthly data, then express the market value as a multiple of that regression over time, view it on logarithmic scale, notice some patterns, do some math, apply some critical thinking, figure out the implications...

read the paper:

https://i.redd.it/erghlcv7lqw31.jpg (https://i.redd.it/erghlcv7lqw31.jpg)

https://pdfhost.io/v/ym3kQ9QDy_On_the_Convergence_of_Bitcoinpdf.pdf (https://pdfhost.io/v/ym3kQ9QDy_On_the_Convergence_of_Bitcoinpdf.pdf)

https://medium.com/@AJC241469/on-the-apparent-convergence-of-bitcoins-usd-market-value-toward-the-stock-to-flow-valuation-model-7a9275ac2206 (https://medium.com/@AJC241469/on-the-apparent-convergence-of-bitcoins-usd-market-value-toward-the-stock-to-flow-valuation-model-7a9275ac2206)

Everybody likes pictures, so here are the pictures from my paper:

https://i.imgur.com/ILuCNFj.jpg

https://i.imgur.com/VEomSf7.jpg

https://i.imgur.com/PNXor1c.jpg

https://i.imgur.com/6BeHWrI.jpg

https://i.imgur.com/FbJniPY.jpg

R^2=99% is impressive.
We know Bitcoin is digital gold, now we have the mathematical proof of it.


https://pbs.twimg.com/media/EIrzfXCXUAAiRl2?format=jpg&name=large

https://twitter.com/100trillionUSD/status/1192032782912040960?s=20

 - that's hardly proof. Why does Plan B use so few data points? A high R^2 is quite useless if you only pick the points that fit on the line. there are thousands of other points! Just read my paper, he could have found what I found!

He demonstrated that high stability in the parameters indipendently of the sample you use.
I only diagonally read your paper, for the moment, sorry.
You could better point out in the post what your conclusion are because they aren't clear reading abstract and conclusion paragraph, actually.

Yes, I know. But there is really no way to summarize it because it is difficult to explain, even in 4 pages. There is one reddit user who still doesn’t get it, even after I’ve tried to explain it further.

quite right and I apologise for doubting you. Here's the real infos, showing the history:

Interesting article :
Why Bitcoin’s Next ‘Halving’ May Not Pump the Price Like Last Time
https://www.coindesk.com/why-bitcoins-next-halving-may-not-pump-the-price-like-last-time

Also, in traditional markets, price is rarely a function of supply. It’s more influenced by demand, which the S2F model does not take into account. In the absence of an established and widespread fundamental use case (for now), demand in crypto markets is narrative-driven.

Thanks for posting. It's an interesting analysis and I'm glad to see some counterpoints to the bullish halving narrative.


The reduction in new supply hasn't even occurred yet. It's impossible to predict when the reduction would be "priced in" by market demand.


Constant demand (all else being equal) would lead to a price increase, so the author is implying there is or will be a decrease in demand. I'm not sure that's a well-founded assumption, given that the numbers of crypto users continue to swell:

https://cointelegraph.com/news/number-of-crypto-users-nearly-doubled-in-2018-study-says
https://news.bitcoin.com/the-number-of-cryptocurrency-wallet-users-keeps-rising/

Why constant demand would lead to a price increase? The supply won't decrease like for a token burn for example, it will just increase less quickly...

Price is not determined by the total supply, but rather the supply available for sale.

Inflation = new available supply. If inflation is lowered, there will be less coins available for sale because some portion of mining rewards will always be sold (covering mining overheads/liabilities and profit taking).

Constant demand + decreased supply = price increase. It's simple economics.

I don't think it's really as "simple" as you say. Many people sell btc to buy altcoins for example, 300btc a day it's important but it's not the largest part of the sales. If it's as simple as that why we are at the same price as 2 years ago while we are only 5 months before the halving now?
How do you explain that futures prices for the next year are so low?

This thread itself is so deep. I never knew 2020 (which is next year) would have a great impact on the price flow of Bitcoin for the upcoming years. Merit to you sir. I don't understand some of the things since I'm not a native speaker and my knowledge of economics is not that deep but I do have questions.

I think the past halving was successful due to the fact that Bitcoin is still an infant. There's not much invested in it compared today and it isn't advertised as extensive as today. The last bull run was successful because of many factors like altcoins, ICO, even the scam Bitconnect, airdrops which is so extensive that even people without knowledge about Bitcoin gets to invest in it, and many more.

What if those factors didn't happen this year? does that mean the price of Bitcoin would decline significantly for the upcoming years? Why would more people buy Bitcoin just because it is halving? Well if we did get a Bull run up to 25k, will the model still continue or it's a fail?

Selling BTC for altcoins doesn't hurt BTCUSD prices.

In fact, the altcoin markets are very bullish for BTC. Instead of selling for fiat, BTC traders move their supply to altcoin exchanges instead. This makes for less available BTC supply on fiat exchanges. Altcoin investors also buy BTC off fiat exchanges to send to altcoin exchanges. Both these dynamics drive BTCUSD prices up.


Because markets take time to reverse from bear market to bull market. Bitcoin in particular moves in exaggerated boom-and-bust type cycles.

We are 6 months out from the halving. At this point in 2015, the market was trading at a 60% loss from the ATH. The market is currently down 55% from the ATH. Everything looks pretty normal to me.

But Coinmarketcap uses altcoin markets to calculate the BTC price
https://support.coinmarketcap.com/hc/en-us/articles/360034116491-Market-Data-Cryptoasset-Rank
https://coinmarketcap.com/currencies/bitcoin/markets/

If people sell btc for potatoes and potatoes worth 1$, of course it will affect the price discovery process.

The current price could basically be the bottom of the next exponential bull run that will start right before the halving and potentially peak 12-18 months after the halving with a price bubble.  That is what we saw in the last 2 halvings.

So saying that investing in bitcoin at present moment is right thing to do, won’t be wrong at all. Better would be to say that this is the last chance to buy world’s most expensive asset at low value. We wont have same opportunity ever again. Halving brings good changes to all crypto currencies. This time will be the same also. So finally investors can stop waiting and complaining, and focus on getting more coins.

Very interesting reflection came out from this tweet:


https://twitter.com/cclerici/status/1192548291797569536


PlanB replied:

https://twitter.com/100trillionUSD/status/1192553080207945729

This means that when/if Bitcoin will succeed as a SoV, all other inferior SoV will be stripped of that function, returning to their "industrial value". This is a real paradigm shift.

Another great tweet!
We already knew parameters were stable in time, but this comes as a nice confirmation!


https://pbs.twimg.com/media/ELW23FxWwAUWAr2.jpg

https://pbs.twimg.com/media/ELW23FoWkAEWOOj.png


https://twitter.com/geertjancap/status/1204069538033209345?s=21

Stable parameters while using different subset are adding robustness to the model.

Halving is a thing on Google Trends!

 Google Trends: Bitcoin Halving Refutes ‘Nonexistent’ Retail Interest  (https://cointelegraph.com/news/google-trends-bitcoin-halving-refutes-nonexistent-retail-interest)

https://s3.cointelegraph.com/storage/uploads/view/f80f4da66bf2afba71e6560aac61c4fa.png

Bitcoin (BTC) investors and mainstream consumers are paying more attention to the cryptocurrency’s block reward halving in May 2020.

According to data from Google Trends on Dec. 17, worldwide searches for “Bitcoin halving” have significantly increased in the course of 2019, over a year before the halving occurs.

We see from the image the interest for halving has already surged: not only it has been more searched than the complete halving in 2016 (I guess the area below the line is already bigger), but also it is actually been rising since March, time of publication of PlanB article on Medium.

The sad thing is: if halving is a well known fact bewteen investors, and probably this mean they know something about the SF model: why the is the price still struggling?

Tuur Deemester doesn't seems to worried about this:

Very nice presentation!

https://twitter.com/100trillionUSD/status/1208082599354208258?s=20

https://talkimg.com/images/2023/05/16/blobdc9fcfc4779a0de8.png

Bitconometrics and what‘s driving the Bitcoin price | Manuel Andersch (https://www.youtube.com/watch?v=R6k5cmdscfg&feature=youtu.be&t=267)

Because this isn't the only factor affecting price. We can't view the halving in a vacuum.

Compared to 2016, the market is experiencing considerably higher volatility in the year preceding the halving. The August-November 2015 rally was only 150% and was followed by a 5-month tightly ranging correction. Compare that to the 350% rally seen earlier this year and the 6-month bloody correction that followed. This time around, there is more volatility in both directions. I think that's more a function of price feedback than any relationship to the halvings themselves.

If the market goes on to mimic the April-June 2016 rally into next year's halving, that will be due to investors pricing in the halving. Put another way, it probably hasn't been priced in yet. We've still got 5 months before the event takes place. A lot can happen in that time.

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:

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....

Totally agree.

The post was only meant to clarify the assertion that many events impact BTC price in this model.
The numbers of the model do not agree with this view.
Then, a model is a simplification of reality “, hence those statements must be taken into account with due responsibility.

I think that the model is really great, and I like the 4 year fractal comparison model and the s-curve exponential adoption model and the 7 network effects model/which is also about adoption... .

I just get a bit worried if people start to assign a 95% probability on investing in the future of bitcoin, in that kind of a price expectation model.. which I have already stated my concerns, and similar concerns can be made about the other models, which I like to point out the attributes of those kinds of BTC price/growth prediction models to shitcoin pumpers, bitcoin naysayers, bitcoin fence sitters no coiners and precoiners.  

Any of those bullish bitcoin models could end up causing a lot of rekkt regular peeps if they don't themselves engage in prudent self-tailored financial balancing.  

Surely, I am not criticizing your sharing of information related to this topic.

No, it just means the long term price regression is a 95% fit to the model. BTC price rises significantly above and falls significantly below its long term regression at various times during its market cycles. You can have significant outliers in both directions without throwing off the regression very much, hence why the model is still a good fit.

You are suggesting either

• price will never deviate more than 5% from the model, or
• price will never deviate from the model more than 5% of the time

Neither assertion seems reasonable.

What I'm saying doesn't contradict PlanB's point either. The whole point of using this model is that it already accounts for all fundamental factors. In fact, that's the logic underlying TA as well; it prices in all fundamentals.

It's just that you're only considering today's price. We need to consider the decade-long price regression instead. I predict that people focusing too much on this model will sell way too low during the next bubble for the same reason. They won't account for how far price can overshoot the model.

Also, it's important to keep in mind this model relies heavily on extrapolation. That R^2 value may decline significantly over time.

I might have been misunderstood, or I might have misunderstood what you earlier wrote.
I never suggested price couldn’t  deviate from SF model price, of course this is an unreasonable statement.
What I said is exactly in the long term the SF explain 95% of the value.
Temporary deviation are of course possible, but these have to be considered... temporary.

PlanB be himself  analysed those misalignment and also concluded they are skewed to the downside, meaning that SF is also underestimating the actual price.

The main point of the model, or the only point of the model, is that the only long term factor is SF. All other factors are irrelevant for the long term price.

I am not so certain about declining explaining power of the model  in the future.
Firstly observing different time frame, or different sampling frequencies parameters and R^2 have demonstrated a very hush stability.
Secondly one version of the mode considers only monthly samples in the 2009-2012 period, so even BEFORE the first halving, has very similar projected price, parameters and R^2 than the full model.
So I have a good confidence that if the model has been stable over the last 10 years it can also be stable over the next 10 years.

Lastly, I am very little concerned about current price. All I wrote in this thread has to do for longer term price (I thought that was clear given the topic).
Nothing of what I wrote has to do with current price, hence nothing has to do with trading advice. Even if this had to be confused with trading advice: DYOR before doing anything.
 

This says nothing about whether the extrapolation will hold true. Extrapolation is always subject to great uncertainty and is likely to produce meaningless results. I think we're all hoping the trend holds but 10 years is an exceedingly small data set. All we know is the model is a good fit given 10 years of data. Whether it holds true over 20 or 30 years is a very different question.


I was referring to this comment:

10 years is a couple of halvings.
In a couple of halvings price will be in the millions USD: this means something is going to break (BTC or USD, still to understand). I think nobody can predict what will happen in 20 years.

You're talking like BTC is guaranteed to follow the stock-to-flow model. It's not. If the model were guaranteed, the price would be exponentially higher than now.


It still seems like you are focusing on today's price. Bitcoin's price markups are exponential and quite fast so it really doesn't matter if it's "a few times undervalued." We should fully expect price to remain both above and below the model for significant periods of time, just as it has throughout history.

I give up this conversation.
I think I made my points clear enough but you still point out things I didn’t mean.
Picking single (incomplete) sentences out of my context of the post don’t add value to the discussion.

Don't give up fillippone.  Keep posting.  Sure you don't have to engage with exstasie, if you don't want to, but I don't think that he is trying to be hostile to you.  He seems to merely be attempting to explain the limits of the model from his perspective, and framing what the model says in a way that is different from you.

I find it interesting, too, about how much actual BTC prices might end up in fact deviating from the model, and some people will still proclaim that the model still applies (and they might or might not be correct).  Surely, there are a lot of us, including myself, that agree that the model has a very high explanatory value, and even though I don't really understand the math, exactly, I have no real reason to dispute the 95% R^2 value is either correct, or damn close to being in the ballpark of correct.

It can go back a little to the point that I mentioned earlier regarding how much status quo institutions banks and governments might want to fight the momentum of the truth of the dynamics of the model to either make the model become untrue or to make it appear to be untrue.  Likely the stronger the strength of the model, the more likely powerful status quo cannot either get the model to break or get it to appear to be untrue for a very long period of time... because the more that the model is close to being true in terms of past facts and likelihood that past facts are going to apply to future world dynamics, the more accurate of an explanation it is regarding both the past and the future and the more likely the BTC price is going to gravitate towards the mean that is in the future aspect of the model.. whether fucktwat manipulators want the btc price to gravitate in that direction or not.

We will see... we will see.

https://youtu.be/R6k5cmdscfg Bitconometrics and what‘s driving the Bitcoin price | Manuel Andersch
https://youtu.be/K2s2afJC5v4 Why Stock to Flow and Market Capitalization Co-Integration only works with Bitcoin | Jörg Hermsdorf
both videos from the Value of Bitcoin Conference some months back, but recently uploaded.

edit whoops!

Thank you!
First video was posted here above on this very page, the second one is very interesting!

I read up to this point:


And it was enough for me to stop reading any further. It is utility that gives value to something, not its cost of production. No matter how much one bitcoin is worth in terms of production costs (electricity, time, effort, etc), if it loses its utility (right now mostly as a vehicle of speculation, and as a store of value, to a degree), its price will be zero, and no amount of scarceness will be able to fix it. In simple terms, when someone talks about scarcity without referencing utility at the same time, they are likely not very competent in economic matters

So value comes through utility, and scarcity adds a price tag to it

Friends Gold production cost is low? Or how other mines are produced. Bitcoin production is very costly and needs to be found as an alternative. However, only for this reason the use of bitcoin will not stop. I think a new structure will be created with LN.

I think you misunderstood the “ unforgeable costliness”.
This is not to set a minimum threshold for bitcoin valuation, like an “intrinsic value” as they used to be.
This is only meant to answer the question: “why you do say bitcoin is scarce when I can create infinite bitcoin clones (think of all the bitcoin forks back created in the 2017 season) thus nullifying the scarcity hypothesis?

The answer lies in the cost to write an information on the public ledger: mining bitcoin is very costly: writing a block is not cheap (it’s cheap to transact, but this is a different measure), hence using bitcoin is a good store of value because nobody wants or can alter his history. Nevertheless the bitcoin protocol and the number of bitcoin in particular.
This is not true for fiat money, where a very small group of persons can unilaterally change the ninety supply or, as I said, the various shitcoin where again a small miner can alter the blockchain.
This was the meaning of the above sentence, as I understood it.

That's how I got it

Anyway, introduction of new terms like this one is not a very bright idea overall, especially in the field with an already established and well-defined vocabulary as it only leads to confusion and misunderstanding. Regardless, the cost of mining a bitcoin, or as you put it, the cost to write a piece of information to the public ledger has nothing to do with its market value, let alone a store of value. Put differently, if you could render the information in the blockchain as immutable as it is now at no cost at all, Bitcoin would be as valuable, if not more, provided you kept it capped at the same 21M coin limit as of now

We should not also forget the fact that even tho there are bitcoins that are mined every single day there is also fact that some are locked for people to use in exchanges that we can never really calculate.

There are probably close to over a million people by now (making up this number, don't have any data) that have money in some exchange that is not used at all and exchanges can't use that money neither since it is owned by other people so all in all it becomes a way where bitcoin is stuck there doing nothing, it is not lost and it is not sent to somewhere wrong and nothing is done badly to them, they are just locked there for future use or even maybe long term holding which means bitcoin is even more scarce than we can imagine. Who knows how many people just put bitcoin into a USB and locked it in a safe?

Too many people may have invested in Bitcoin. A new order is about to be established. Bitcoin price can move up or down. It doesn't matter. Bitcoin offers something else. The price may become more stable as bitcoin becomes widespread to too many people. When the price problem is solved, a new social order will be established.

The other thing, is that even though there could be a great number of clones and forks, they're still not the same as BTC. Any transactions are on separate blockchains, not bitcoin's.

I don't think it's possible to calculate it. We don't know how much the bitcoin wallet is locked. We do not have the power to examine Bitcoin movements from day one. However, the amount of bitcoin circulating in 130 years will be clear. Then the inhabitants can make a more accurate assessment.

I don't think we need to wait 130 years, maybe as short as 10 to 20 years is all that's needed as by then 99% of all bitcoins will have been mined, and it's another hundred years to mine the last one percent.

Ahead comes Halving Bitcoin and we can see the simulation of Bitcoin in practice. This will happen in May 2020.

Another tweet by PlanB on the most discussed topic: why bitcoin price is so low if S2F model is true? Why people are not discounting future halvings?


https://pbs.twimg.com/media/ENM3hPhXsAA6kBQ?format=png&name=large

https://twitter.com/100trillionusd/status/1212373777927081984?s=21

I am a little bit confused about those white dots.

Explain to me like I am a young person...

What do the white dots represent?    And, why is the $10 line highlighted?


Edit:  I did not change the chart (I just clicked on "Quote" in order to reply), but my post is showing the $.10 line as highlighted.  I don't understand that, either.

The white dots represent the ratio between BTC price and Model price. I think they improperly use the left axis discarding the $ symbol.

Look at the end of 2013: the BTC price is around 1,000$ and the mode price is around 100$. The ratio is then 10 and the white  dot lies on the 10$ horizontal line.

I can’t see any line highlighted, it’s a mysterious mystery.

O.k.  That clarified my confusion.  The white dots are just representing how far above or below 1 (in sync) the model is in with what it predicts in terms of where BTC price is as compared with where the model predicts BTC's price to be.  Makes much moar senses, now.   Thanks.  ;) ;)

Grayscale just updated his investors about 2019.:

A new Bitcoin boom?Grayscale reports record crypto investments for 2019 (https://fortune.com/2020/01/16/bitcoin-firm-grayscale-reports-record-investments-for-2019/)

Something stands out:


From their report:

The current situation is this one:

https://pbs.twimg.com/media/EORkzCyXkAAqiKz?format=png&name=4096x4096

Please note the relative size of Bitcoin Investments comparet to shitcoins.

You can download the complete report here  (https://grayscale.co/wp-content/uploads/2020/01/Grayscale-Digital-Asset-Investment-Report-2019-January-2020.pdf)(you need to prive an email-trowawaymail will work).
So returning on topic, doing some back of the envelope calculations:

USD 607 millions@BTCUSD8,000 means roughly 75,000 bitcoins were bought this year.
After the halving each year 6.25*6*24*365 Bitcoins will be mined.
This means Greyscale alone will buy more than 20% of newly mined Bitcoins next year.

Of course this doesn’t mean only the new mined bitcoin will be bought by Greyscale: they will probably buy via OTC desks from whales, nevertheless this is a looming offer on the market that will be swept away.

Do not forget also Jack’s Square, who has been buying massively bitcoins over the last quarters.

How cannot this be bullish?
This is Stock to Flow in full power!

No Tulip Trust? ahahahah..... I didn't know they had anything else other than BTC. But even with the relative size, look at the absolute size, some 5 million went to BCH. I can understand a little bit the others too though. ETH and ETC act like the index ETFs (exchange traded funds) of the altcoin world.

Another article from PlanB has just been published!

Very interesting.
This article is trying to answer one of the most common question: why Bitcoin is still at a very low level if it is going to be worth in the million in a few years?

https://miro.medium.com/max/548/1*01nG9TGRFba6rSER7xIOEw.jpeg

 Efficient Market Hypothesis and Bitcoin Stock-to-Flow Model (https://medium.com/@100trillionUSD/efficient-market-hypothesis-and-bitcoin-stock-to-flow-model-db17f40e6107)


The read is very interesting and I'm going to analyse it on the next days, but the ultimate conclusion is: don't worry. Markets are rational AND bitcoin is cheap!

---

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This post is eligible for my project:



If you think you can help here, just visit the thread!

Has the recent dump invalidated the stock to flow model?
Not at all:

https://pbs.twimg.com/media/ETVkRg_WAAIY2VM?format=jpg&name=4096x4096
https://twitter.com/100trillionUSD/status/1240008836792139782?s=20

Going down the thread there is an answer that might then surface on your head:

Q.

A.


Wow, what an hint:
Going to the website we find that:

https://talkimg.com/images/2023/05/16/blobce32a1c840d2f2e2.png

Given that the halving is just about a month away and many people in our home country Vietnam are still seeing Bitcoin mostly as a speculator's game or simply as a tool to move value around, we have had some of our team members recently translate PlanB's original article into Vietnamese:

https://news.bitcoinvn.io/mo-hinh-dinh-gia-bitcoin-stock-to-flow/


...as well as Eric Voskuil's ( Libbitcoin (http://www.libbitcoin.org) ) critique of the model:

https://news.bitcoinvn.io/sai-lam-cua-mo-hinh-du-doan-gia-bitcoin-bang-ty-le-stock-to-flow/

Almost forgot to post here another good podcast where PlanB appeared as a special guest:

Pomp Podcast #238: PlanB on Why Bitcoin’s Stock-To-Flow Model Is Becoming More Accurate Over Time


https://www.youtube.com/watch?v=ryLZiE0N4lQ

We also added by now the response of PlanB (https://medium.com/@100trillionUSD/efficient-market-hypothesis-and-bitcoin-stock-to-flow-model-db17f40e6107) (from 19 January 2020) to various critiques on the model to our Vietnamese language series on the topic:

https://news.bitcoinvn.io/li-thuyet-thi-truong-hieu-qua-va-mo-hinh-stock-to-flow-bitcoin/

Used my quarantine time and help from a fellow translator (thanks @gazetabitcoin ) to polish a few typos, minor edits and adding all the other translations of the original article.

Little update on this.
Plan B just tweeted this:


https://pbs.twimg.com/media/EWSLL4gWkAEXzae?format=png&name=4096x4096

https://twitter.com/100trillionUSD/status/1253281280772407298?s=20


So, one year has passed since the quoted image, and parameters aren't dramatically changed.

This is why S2F is a robust model, whaile others are just line drawn over a chart.

Like this one, for example:

Diminishing returns on a log chart in 2014:
https://pbs.twimg.com/media/EWSW8qnWAAA9-Ke?format=jpg&name=medium

Diminishing returns on a log chart in 2020:
https://talkimg.com/images/2023/05/16/blob7f5092d28cdd97c5.png
Source (https://medium.com/quantodian-publications/bitcoins-increasing-price-resistance-uphill-short-and-long-term-36ab6f74e61a)

You see parameters aren't constant.

^ You quote me, bro? Whatsup? Is the variance not widening (yet)? I see R² changed to 0.698 for the blue one. Can you explain it? Thank you.

Sotty mane, didn't realise I was quoting a message of yours.
Blue correlation changed because they are actually different, as in the upper graph it is Oct 09 to Oct 12, while in the latter is Jul 10 to Nov 12.
Why he did so it's not clear to me, and , sadly, made those to graph actually not comparable directly.
Also note the legend is not correct, as also the Green period starts in Jul 10.

So, Maybe this planB update was a little bit rushed!

Get ready.


https://pbs.twimg.com/media/EWdAaKpXQAY1FqW?format=jpg&name=medium

https://twitter.com/100trillionUSD/status/1254042161647099905

Third PlanB's article

Bitcoin Stock-to-Flow Cross Asset Model (https://medium.com/@100trillionUSD/bitcoin-stock-to-flow-cross-asset-model-50d260feed12)

https://miro.medium.com/max/1400/1*Nyt01i2UtTguaP1DD3tsJA.png

Introduction:

Conclusion:


He basically use 2SF to interpolate between different asset classes.
In the first article he extrapolated bitcoin prices regarding time, here interpolate across asset classes using S2F.
Still have to think about it.

No offense intended, by from my vantage point anyone who takes years prior to 2015 (not even speaking of 2010-2012) and says that their model works good on them too actually discredits the approach they are taking. In reference to Bitcoin, for early years one should use models and frameworks describing stochastic processes like random walk as Bitcoin's dynamic back in the day was completely chaotic and random

This is not to say that today's prices are not random for significant part, even though with more fundamental factors at play now

Why would they?
The model is co-integrated.
This means it is actually working, with those parameters, even if they are computed in such an early stage of bitcoin.
This means short terms fluctuations of BTC price around S2F model are possible, but statistically not significant.

Because prices were random in those years

So anyone who tries to describe the early Bitcoin history using anything other than pure statistics and its methods, which are descriptive on their own and say nothing about the driving forces behind the raw data, is actually trying to derive a meaning from, or relate a meaning to, something which is, or was, meaningless (as a process) due to its random nature. If you ask me, this is not a good idea as it casts doubts on the plausibility of the entire approach

In fact, I understand why people are doing this all the time (because they are looking for coherent explanations and plausible reasons for anything, even entirely random things), but any model, which is not statistical, either explicitly or implicitly, should separate the random part from the part which it tries to explain if it is to have any predictive power, i.e. an ability to generate verifiable predictions. But in case of early Bitcoin, there is simply nothing to winnow out

That is the point.
It wasn't random, because there is a 95% R^2. This means 95% of the price is explained by this model. All the other factor are explaining 5%.
And this is not a spurious correlation (like high correlation between people drown in a pool and Nicholas Cage movies (https://www.tylervigen.com/spurious-correlations)) because this model is also cointegrated. A fact that rejects this hypothesis.

The numbers don't tell anything by themselves

For instance, you can take an arbitrary set of random data and build a model (say, a polynomial function of high enough order) that would technically give you a 100% accuracy, at least as far as only the sample data points are considered. Then, on this account, you could go on to claim that the distribution is not random (following your logic here). But it would be a far cry from actually explaining anything in a meaningful way, let alone having any predictive power (the analogy of a random number generator seems appropriate here)

This is probably a borderline if not outright extreme example but it is still illustrative enough to show that numbers can be misleading as well as deceiving, and thus shouldn't be taken in isolation for drawing deductions and making inferences. You can arrive at very bizarre conclusions if you don't assess and keep in mind the nature of the subject matter. Put differently, statistical metrics are sufficient and unreservedly valid only in reference to truly random populations. With everything else, we should rather be concerned with looking for the underlying principles, forces, and causes, i.e. the actual mechanics of some phenomenon or process, and how things work internally

Mistaking correlation for causation has already become a cliché of sorts, but it is only a tip of the iceberg of the whole gamut of possible judgment errors we have to deal with and be aware of

I totally get your point.
But i guess the original S2F model has already well demonstrated it is not a well articulated fit of a random data point, as it it cointegrated (this is a statistical test) and parameters are well stable over time (running S2F over different data sets, taken from different halving cycles for example, yields to almost identical parameters and price predictions).

A lot of your points have been actually been raised in the past and discussed in the above thread.
I think it is useful to approach the topic with a grain of salt and in a "challenging" way, as you are doing (we already have religion where you need faith to believe, models are different).
So I am happy to discuss your questions, as answering might me help me find the flaw in this model. I would like to find it, as I find disturbing to have a BTC valuation in the millions in a couple of halving....this means something (the USD) has to break to be true. Otherwise it is the BTC that is going to break.

A nice surprise:


https://pbs.twimg.com/media/EW2EglhXgAEMtnu?format=jpg&name=large

https://twitter.com/100trillionusd/status/1255805636555739138?s=21

This is a Great interview.
A lot of information about the article and what is next.
Of course a few months have passed, so you have to put this in context, but the ideas are still there!

A really nice Webcast by Stephan Livera on Stock to Flow with Saifedean Ammous, author of the Bitcoin Standard and first proponent of Stock to Flow model in Bitcoin, and PlanB on his new Stock to Flow article, model development, haling and many more.


https://pbs.twimg.com/media/EXLRbNVU8Ac6Jwa?format=jpg&name=medium


Definetly worth listening to.
I will try to extract the most interesting parts here.

In Episode 392 of the Bitcoin Audible (rebranded from cryptoconomy), Guy Swann read Dominik Stroukal's critique of the stock to flow model, and really it seemed that Stroukal had made a really strong, persuasive argument critiquing the stock to flow model in terms of asserting that in economics, any model should account for both supply and demand, and proclaiming that the stock to flow model is pure speculation and wishful thinking because it ONLY focuses on supply.

More or less Guy Swann's rebuttal tears Stroukal a new asshole... hahahahaaha... What I am suggesting is that it is a good podcast, with both a good read of a provocative article and a great rebuttal, too.

Here it is:

Bitcoin Audible (previously the cryptoconomy): Read_392 - Economics of the Bitcoin Halving [Dominik Stroukal] (https://overcast.fm/+MYnyAs7GQ)

Is he serious?
If that were true Just tell me where demand (or supply) is considered in Dividend Discount Model for stocks, or Black&Scholes Model for derivatives

Thanks for sharing! Listening now.

I may not have been summarizing the Stroukal arguments very well.  I just listened to it while I was doing some other things, and overall it sounded like Stroukal was making some decent arguments to me, until I listened to Guy Swann's various rebuttals.

One of the difficulties seems to be to assert that if you create a model that only emphasizes supply that demand is NOT also sufficiently embedded in the model by accounting for supply, such as holding demand constant or allowing for demand to be embedded in the historical data that is plotted on the line in order to create a trajectory based on where BTC prices had already been and where the prices had clustered.

So, even though demand might NOT be explicitly discussed within the model, it may be adequately accounted for by plotting the starting / historical prices which implies demand as a kind of constant (and perhaps within a range). just

Of course, stock to flow can be read as allowing for a lot of variance in where BTC price might go above and below the projected price points, and that tolerance for variance seems to allow for variance in the demand that may cause the price projections to deviate from where they might more likely thought to be on the model, too... so even though Stroukal's arguments presented the lack of demand within the model idea persuasively, I still question whether the model does not adequately account for demand by largely plotting empirical price data points and then kind of assuming a range of ongoing demand as a kind of constant or range and including that scarcity of supply likely motivates demand within a projected range of ongoing expectations that are reasonably predictive of future BTC prices, too.  


Great.  Let us know if you have some further insight regarding the topic.

I personally do not like to listen to the same thing more than once, unless there has been some considerable passage of time or I am feeling motivated to listen again for some other compelling reason.

I saw a very intrresting picture on Twitter.
That was a back-of.the envelope calculation i did many time here on BTC Talk (cit. needed), so I tought to make my onw version to share with you guys:


https://pbs.twimg.com/media/EXZD3RUUwAAwLG9?format=jpg&name=large

https://twitter.com/listedreserve/status/1258268244319694848?s=20

So, here it is my version to play with.

I am going to update it with reference of every price and numbers from reliable sources.

https://talkimg.com/images/2023/05/16/blob70030a83e84b21a1.png
https://docs.google.com/spreadsheets/d/1weRaV1wuOM8XlsbvRGX7YkJ9-EbT2SuA_-x3irHRd-g/edit?usp=sharing

This is the biggest reason why S2F matters.

^ Nice fillippone. Are those Grayscale/CashApp numbers net buys?

Yes, as per my understanding, those are net buys.
I included in the Google Spreadsheet the link for financial statement for Greyscale (still working on Cash App ones), where youwe can doublecheck this information.
Don't trust, verify.

Of course the idea those buys are satisfied by newly minted coins rather that the existing coins is rater naive.
There are more than 18,000,000 BTC out there, so this  buying pressure is a tiny fraction of this supply.
But nevertheless, BTC whales will get eventually eroded by this pressure.
 

PlanB is slowly expanding his Cross Asset model:


https://pbs.twimg.com/media/EYd-g3kX0AIUSMW?format=jpg&name=4096x4096

https://twitter.com/100trillionUSD/status/1263118694579920899?s=20

So, many Store of Value aligning on the "magical" regression.

I guess that as Bitcoin moves up the line, becoming more and more scarce and with his valuation going up, more and more of those assets will lose their place on that line, as Bitcoin will eventually "drain" from those assets their "Store of Value" functions, leaving them only with their "industrial value".
It happened with Silver, it will happen with Gold and any other Store of Value Assets.

As much as I would love that to come true, it's highly unlikely
 

So why did it not start with gold?

I mean, long before Bitcoin? Gold is also scarce and has been scarce since day one (apart from two events in the very remote past when it wasn't), so it should have done the trick long ago. Why didn't gold strip other assets off of their store of value functions? If we proceed from the assumption that it didn't, what is it in Bitcoin which gold lacks? Yeah, you can transact with Bitcoin but somehow it doesn't feel like its killer feature that would make it reign supreme among other such assets. You don't need to transact (much) with a store of value (as the term itself suggests)

Gold is quite likely to suffer silver's fate in terms of reverting to its industrial use and industrial value the more that bitcoin supplants gold in terms of a safe haven asset and increasing financialization of bitcoin, and surely bitcoin is better than gold, anyhow in a variety of ways.. People have merely not come around to realize that bitcoin is better than gold yet..,. but they will.. they will .. and some people are already coming around to that realization.... and especially people who have been studying the bitcoin space, which you should be one of those folks, deisik.  You have been around bitcoin (at least your forum registration seems to show it) longer than me, but you still don't seem to fucking understand what is bitcoin?  Crazy that.  Some people take time, right?


In essence, you should realize by now that bitcoin is better than gold in terms of its scarcity, portability, verifiability, divisibility, programability, lack of a need to endure as much third-party risk or costs and likely other characteristics, too.


Likely, because of its physicality, gold has remained somewhat easy to manipulate with the passage of time.  I would not be negating that bitcoin has done decently well in maintaining decent value with the passage of time, even though it has been manipulated through its history.


I already covered that point above.


 It does not need to feel like bitcoin is any kind of killer currently.  Don't get so anxious.  Bitcoin is very early in its level of maturity and adoption, so you can choose to bet on it, or you can sit on the fence or you can bet against it.  The choice is yours.  Just don't come whining 4-10 years later when you cannot even afford .1BTC because you failed/refused to invest while it is still relatively cheap.


Of course, you do not need to transact much with bitcoin either, especially if there are a lot of inferior stores of value that you can use for your payment processors, but sure, there are likely going to develop more and more payment mechanisms with bitcoin too, even though perhaps it may not end up getting used a lot for small transactions if there are other payment mechanisms that are available.

On the other hand, there may be some people and some situations in which it might be way better to use bitcoin rather than some other mechanism that  either relies on a third party or there might be some other questions regarding the real time transfer of value or the ability to reverse the transaction, let's say for example there is an oil tanker that has $100million in value, and it might be better to transact in bitcoin for such a seller to feel comfortable about making sure that the value of the bitcoin is received before delivering such oil to the buyer. 

Of course, there can be a lot of other examples in which bitcoin might be the better vehicle for the transfer of value, but just using the oil tanker as one possible example.

I agree with all of this

And I think no one would argue that Bitcoin is better than gold in most all of everyday circumstances. With that said, however, I don't think that anything would be able to beat gold before Bitcoin has long been beaten out of the picture, and not just as a store of value but completely wiped out -- in case things go massively awry. That's probably a sufficient reason why gold is better, and will always be better than Bitcoin as a store of value on longer timeframes. In fact, Bitcoin is quite fragile, while gold, physical gold, is virtually indestructible

I came late replying to this, and I think JJG summarised (well, I would rather say he actually expanded) the answer I had in mind.
Bitcoin is better than gold in so many ways that in the long term it will strip gold, and ultimately every other SoV of their financial value, leaving them only to their respective industrial value.

This is what is already happening today: negative rates and CB’s going brrr all around the world are sending fiat money south: some of those (ARS anyone?) is doing that faster than other, but all of them are, USD included (slower than all the others admittedly) as you can easily deduct from XAU increasing in value every day.

It is not going to happen overnight, but if you are reading these lines you are in a position of advantage to be ready when this is going to happen.

And?  

What is the vehicle for the supposed bitcoin doom and gloom?

Is it a software bug?

The internet gets shut down?

Governments are able to outlaw it?

How is bitcoin going to go down, exactly?  Is this doom to bitcoin coming soon, or you do not have a timeline for such bitcoin death?

Is this doom and gloom for bitcoin coming during our lifetimes or even in the next 50 years or even 10 years?

You are saying that we should be investing in gold right now, or you are not saying that?  You realize that gold has supposedly been going to pump forever, but really have not seen it in the last 20 years, right?  Has there been any gold pump, yet?  Don't get too excited about the last 14 years, because if you account for inflation, gold has not really done shit, even if you see a doubling of its dollar value. that ain't shit.


In other words, if you cannot come up with some decent timeframe for the supposed decline of bitcoin, then bitcoin is going to continue to have value gravitate into it and to remain a good investment for all peeps, and who gives any shits if bitcoin dies in 50 years or 100 years or some other unspecified time period, when either we will be dead or we can address that supposed threat model at that future time.

In other words, if you cannot be specific about some kind of reason or some kind of timeline for bitcoin's supposed death, in spite of the currently strong fundamentals and strong price prediction models that include stock to flow, 4-year fractal and exponential s-curve adoptions based on metcalfe and networking effects, then currently bitcoin seems to be in the position to continue to be a great investment in which everyone should consider getting the fuck off of zero and trying to get somewhere in the ballpark of 1% to 10% of their quasi-liquid investment assets into bitcoin rather than hypothesizing about some non-specific doomsday scenario that has about a snowball's chance in hell of actually happening or interfering with the current BTC investment thesis.

Go ahead with your presentation of your purported bitcoin is dead/dying thesis (and gold is better...blah blah blah), deisik.  The ball is in your court.  I am waiting.  You got anything or are you too busy (distracted) looking at some shitcoin chart?   :D :D :D

Internet down means Bitcoin is down too, as simple as it can be

It may be down for you personally or more globally, temporarily or more permanently, but the outcome will be the same, and it can have pretty ugly consequences if it is to stay. I really don't see any plausible reason why anyone would want to question that. It can happen tomorrow, it can happen in a year, or it can never happen, but just the possibility of it, which is real and palpable, should make every Bitcoin holder think twice. That's basically the reason why everyone should have ready cash on hand (gold is somewhere down the road). It is just common sense and street wisdom. Shit happens, and ironically, when it happens, we are more often than not caught completely off guard as the coronavirus pandemic has revealed abundantly clear

sure.. bitcoin is mostly internet.. but not exclusively internet, and really there are not too many scenarios to presume large scale internet outages of such a scale to make bitcoin NOT work.

In recent years, I have focused on making it my practice to NOT plan my life around events that have low probabilities of happening, but instead to do the bulk (vast majority) of my planning and preparations for more likely scenarios.. has served me quite well to focus in such a way.


Outcome is not the same if there are pockets of access or even time periods of outages versus whole world outages.


Yep.. it could... but again, not too likely whatever the fuck you are speculating about.


I don't question that total outage would have a big impact.  But I am not going to assume getting to total outage very easily or under any kind of straightforward path, even if we have had a pretty BIG event in recent times with a virus and a seeming over-reaction and ill-focused reaction that is likely going to continue for some time, we still have a hard time getting to large scale internet outages that you would like to presume.   ::) ::)


You mean a solar pulse?  Hm?  


Well that might cause some people to only put 1% or 10% in bitcoin rather than larger allocations.

So fucking what?

No one should be putting 30% or 50% or some other stupid ass large amount of preparation into 1% scenarios.. that is going to get them to the poor house quickly... dumb asses.

If you are reluctant and you give some weight to outlandish scenarios, then you might temper down your investment in bitcoin from 10% to 5%, but it should not lead you to go to 0%... that would be retarded.. and sure there are retarded people out there, and they are likely not prepared for much of anything, including the upside scenarios in bitcoin.

By the way, I have no problem with preparing for both downside and upside in bitcoin, and all of us should prepare for both directions, but lame as fuck to be suggesting that anyone preparing for up in bitcoin is not adequately preparing for down, too.





I doubt that gold is necessary... but sure, maybe have some gold, but does not seem necessary.  

Good to have some cash and sure assets in a variety of places and other prepper stuff such as food, property and maybe a gun and some bullets and other stuff like that... ... don't go overboard but have some of those things.  Yes.


Of course, corona virus has revealed quite a few supply chain vulnerabilities, but does not mean do not invest in bitcoin or to invest in gold... you are devolving into a bit of nonsense, and maybe we are starting to exhaust this topic.. for now?
  ::) ::) ::)

Not really a counter argument but more of a nuanced mitigation of the argument...
https://cryptomoneyteam.co/2020/05/21/bitcoin-could-be-more-resilient-to-global-electric-failure-than-banks/

I do agree with you JJG an bkbirge, the internet is not even necessary to trade with bitcoin:

[Total privacy Bitcoin]: off grid Transactions LoRaWan/goTenna (https://bitcointalk.org/index.php?topic=5230202.msg53959271#msg53959271)

I do agree this is a corner scenario, where probably trading bitcoin wouldn't may be the first issue (rather than finding enough food to pass the night), but may be an uber-nerd wet dream (and I am actually thinking about assembling this setup coupled with a Blockstream Satellite  (https://blockstream.com/satellite/)receiver 2.0).

 

Okay, let's not derail this thread anymore

So a few final words to sum it up. It is not like you should choose only Bitcoin or only gold. To repeat, that depends on your investment horizon. If you work on timeframes like decades, I would opt for gold, on shorter timeframes I would choose Bitcoin. But that doesn't mean that you can't use both for shorter and longer timeframes. These are different timeframes, and thus they don't need to be mutually exclusive

The other point to keep in mind is that there are not many people who can purposefully plan so far into the future (like one in a million). To make sense of it, you have to be rich and very well off, as well as have walked up the timeframe ladder (from shorter to longer terms). Conversely, if you are as poor as a church mouse, a timeframe of a single year may be well beyond your planning horizon

Of course, you have a right to allocate in terms of any philosophy that you like or if you believe that your allocation lines up with your view of the world, your timeline and your other various personal circumstances...

but I don't agree with your nonsense about gold being more of a long term than bitcoin or that they necessarily serve differing purposes.  You can frame the situation like that all that you like, and if your world view is that you need to prepare for some Armageddon scenario and physical gold might come handy in that, then you allocate some of your value into that burdensome shiny nonsense.

If you are viewing either gold or bitcoin as a possible hedge against the dollar then that might be another investment scenario and in that case gold could reasonable be concluded to be redundant to bitcoin to the extent that it actual serves as any kind of meaningful hedge against the dollar (which might be a decent leap in faith, too, since it has been so paperized during the years).

Regarding your long term short term nonsense, I agree with that framework to the extent that anyone is investing in shitcoins... bitcoin is not a shitcoin, so we can dispose of that framework in terms of bitcoin.  Since I consider bitcoin to be a long term investment, that does not mean that I am not going to hesitate to get the fuck out of bitcoin if circumstances change in such a way that bitcoin no longer seems like a long term investment.  Merely because someone invests into an asset for the long term and with a long term time horizon does not mean that they lose their discretion to get the fuck out of the asset if the fundamentals or even world environment changes.

Your seemingly dumbass bearish investment thesis in regards to bitcoin presumes that there is some kind of meaningful vulnerability in the internet or alternative communication channels that can be used by bitcoin, and that is just nonsense, but if someone actually believes that to be an actual bitcoin vulnerability, they could still invest in bitcoin, and if they were to see such communication channels becoming an issue then get the fuck out of bitcoin before other people notice such issue.. Currently there is no such issue and we are not even close to such an issue, that is part of the reason I am taking such a harsh tone to the preposterousness of your bearish bitcoin investment thesis.



Who the fuck cares if people do NOT plan very well?  That should not affect the goal that any investor should have in order to attempt to plan their investments and to tweak them from time to time, as needed.  Just because people are not good at planning or investing does not mean that each of us should not strive (for our own good) to plan ahead.  Yeah, if you do not want to plan ahead merely because a lot of others fail to accomplish such planning, then that is your dumbass choice.

By the way, there is a concept of information asymmetry, and of course, if you plan ahead, then you are more able to take advantage of information asymmetry because you are prepared for it.. and that is a place where preparation meets opportunity.. in other words, making your own luck.  Not everyone is going to get lucky in life, but those who prepare have way better odds of running into some "luck" from time to time.



Bullshit.

Of course, rich people have a lot of advantages over poor people, but frequently rich people will fuck things up pretty badly too because they take their already richness for granted.

One of the quasi-secrets of being rich is learning how to live within your means, and sure the more poor that you start out the more challenging will be your situation to improve your lot and to generate investment capital and to be able to create situations in which you have savings and that you are even able to invest whether in bitcoin or in some other assets (stay the fuck away from gold.. if you know how to buy and secure bitcoin.... hahahahaaha).

One of the most important tweet  bt @100trillionUSD answering the most debated question: Why isn't demand factored in the Stock to Flow model?

https://pbs.twimg.com/media/EZsBkZcWoAEHOlr?format=png&name=large

https://pbs.twimg.com/media/EZsBp1OWkAEzn7U?format=png&name=medium

https://twitter.com/100trillionUSD/status/1268610182793228288?s=20

PlanB (https://twitter.com/100trillionUSD) is continuing his campaign trying to clarify some misconceptions about his latest models.

Today he tweeted:

https://talkimg.com/images/2023/05/16/blobe5f3b2ae41136752.png

https://talkimg.com/images/2023/05/16/blob191b888ef9629c96.png

https://twitter.com/100trillionUSD/status/1271555833130815488

As we see he marked the first red dot (the second one is expected soon.
Still, we have to find the narrative for this 5th phase.

PlanB is playing harsh against Vitalik, also continuing demystifing his models:

Vitalik tweeted this:


https://pbs.twimg.com/media/EafnfpDWoAIvPTG?format=jpg&name=large

https://twitter.com/VitalikButerin/status/1272240013363855361?s=20

PlanB was ready to answer this (blunt) criticism:

https://twitter.com/100trillionUSD/status/1272436030097031169?s=20

PlanB on twitter started a series of interesting, yet quite surprising tweets:

https://pbs.twimg.com/media/EbCDJXOWAAAGuQc?format=jpg&name=large
https://twitter.com/100trillionUSD/status/1274664455817826306?s=20

Really?
At face value this tweet states that being SPX and BTC correlated and cointegrated, the fed pumping money in the system is actually also pumping BTC too.
 
In the second tweet computes BTC level based on current SPX level using this new model:


https://pbs.twimg.com/media/EbCDJXOWAAAGuQc?format=jpg&name=large

https://twitter.com/100trillionusd/status/1275108641763471361?s=21

BTC looks like a leveraged bet on SPX.
Of course if we go further up, both BTC and SPX are getting explosives.
What does it means? Are we going to be all rich?
Wrong.
You can be a millionaire and be poor, if a liter of milk costs 10,000 USD.
Have you ever been in Venezuela, a lot of billionaries there who just throw money in the street, because they are too rich to take the bills from the pavement.

Do you know how bankruptcies happen?
Slowly at start, then allo fo a sudden, Weimar Style:


https://pbs.twimg.com/media/EbM1_N_XYAIyVB4?format=jpg&name=4096x4096
https://twitter.com/100trillionUSD/status/1275422699385507842?s=20

This is what it is going to happen if FED keeps pumping USD in the system.
(remember that Bitcoin is not about getting rich quickly, is about not getting poor slowly).
What do these tweet means?
We knew that BTC was not correlated with SPX. A lot of studies and analysis confirmed that. Yet PlanB comes with the statement the SPX is correlated.
I did myself this analysis a few times  and I didn't came up with those numbers. So he must have a different explanation for this.
I will try to find out and detail here.

Whoever that guy (PlanB) is, with such charts he totally discredits himself

I don't know about other fellow posters, but looking at this I can't help catching myself thinking that he is selling snake oil. You know, the kind that ZeroHedge has been selling for over a decade already, complete doom and gloom. It may be enjoyable and amusing to read but if you come to base your actual life choices and decisions on the information presented there, you are in for trouble, probably big time


Sounds pretty ironic, and not far from the truth for the majority of wannabe nouveaux riches

New Plan B website online:

https://twitter.com/100trillionUSD/status/1277930300530667521?s=20


There you can find all his articles, with link to local translations, interview and podcasts.
Definetly a resource to link.

 A very nice podcast interview with PlanB on this new #Phase5 of bitcoin:

Bitcoin Has Entered Phase 5 with PlanB, Jeff Booth & Preston Pysh (https://www.whatbitcoindid.com/podcast/bitcoin-has-entered-phase-5#notes)

https://images.squarespace-cdn.com/content/v1/59641a28ff7c5099c12a5eda/1599220490766-N6MUDMH7YB9OZQZZ0MMO/ke17ZwdGBToddI8pDm48kK4XEGQ0yIvOjusRluXxOSFZw-zPPgdn4jUwVcJE1ZvWQUxwkmyExglNqGp0IvTJZamWLI2zvYWH8K3-s_4yszcp2ryTI0HqTOaaUohrI8PIDidS2cZxrzNhPdPi-f2PChZmO-wp_jhAjmzKgEfRkkU/WBD257+-+The+Next+Phase+-+Large+Banner.png?format=1000w



This Podcast sums up many of the theme i recently cared about:
#Stock to Flow
MicroStrategy Buys $250M in Bitcoin, Calling the Crypto ‘Superior to Cash’ (https://bitcointalk.org/index.php?topic=5268108)
Winklevoss The Case for $500K Bitcoin (https://bitcointalk.org/index.php?topic=5272006.msg55082783#msg55082783)


Is Bitcoin entering a new era? I think it is one of the most interesting topic right now.

Almost two months have passed since last update and everything is behaving nicely:

Stock to Flow Cross assets:



Stock to Flow:

https://talkimg.com/images/2023/05/16/blob035f150a91d84300.png

Price is pretty much in line. Market price il 16,200 with a S2F_{463 days} modelling a 19,900 USD price: 23% of appreciation is well within the cointegration interval needed to keep it reliable.

Don’t get too excited for this price action, says PlanB, as the real bull run has yet to start!


https://pbs.twimg.com/media/EnbFu4UXIAAFztB?format=jpg&name=large

https://twitter.com/100trillionusd/status/1330469160980242432?s=21

Stock to flow has a model price really close to current market price. From now on not only the rise is going to be quicker, but also overshoots relative to model prices are possible.

I would put PlanB's S2F into perspective by removing/mitigating data from 2011-2014: those years data were too inaccurate (exchanges faking volumes). Starting from 2016 is much better IMO and the model still works perfectly. My question is when the red dot will explode, because it will, where will it push the price? Will there be enough buyers to sustain the model? These are my thoughts recently.

There's no need to remove those points.
Even taking into account earlier points, even before first halving, S2F models has quite a decent forecasting accuracy.
This means probably, yes, exchanges were faking volumes, but price wasn't altered on a statistical meaningful way.
Regarding the maximum price possible once the "red dot bull run" starts, well just look at the past: in 2017 market peaked at 3 times the "slower" stock to flow model price, and has rarely been above that threshold. I think I could see that as an upper "limit" to closely monitor.

https://talkimg.com/images/2023/05/16/bloba587fb5df2156d40.png

I don't disagree with you fillippone, but I would frame a response a wee bit differently, even if we may well be saying some kind of similar thing.

Mine would go something like this:

"Fuck that!!!  Why would anyone want to handicap themselves or their model in terms of attempting to understanding what the fuck is going on by removing material and relevant data? If you remove data, then your model likely becomes less accurate. 

In other words, removal of material and relevant data is nearly retarded, if not full blown retarded."

https://i.pinimg.com/originals/d4/05/88/d4058820bb8cac2cd41a8823936c8111.jpg

In other words, Italian "used to be stallion"** you are much nicer than me.  #nohomo

**referring to a prior self-disclosure of yours. hahahahahaha

If this chart is logarithmic, we need to consider that the time it takes to reach the next peak gets drawn out. People look at these charts and think we'll hit 100,000$ by next year...i think it's more like 2022 or 2023 to get to that point. If you notice the duration it took to get to each new all time high, the time period expands by 30-50% each time.

• 1.5 years to surpass $10 - 2010-20111
• 2.5 years to surpass $1,000 - 2011-2014
• 4.0 years to surpass $10,000 - 2014-2018
• HOW MANY? years to surpass $100,000 - 2018- ???

Based on the data it would have to be at least 4 years, which would be 2022. But given the trend that the timeline gets longer to grow 10x, we're looking at more like 6-8 years so 2024-2026 by the time that happens.

Ok smart people...where is my logic off?

You seem to be randomly picking dates and price points to try to tell some kind of story that you want to tell that does not seem to be based on the actual data.

But good luck staying poor if you choose to NOT invest in BTC or inadequately invest in BTC or fail/refuse to prepare yourself in more realistic kinds of ways in terms of looking at the past numbers more realistically and fairly - rather than skewing them with a kind of seemingly self-selection story.

By the way, nothing is guaranteed in bitcoin, even PlanB's stock to flow model is giving a kind of probability set that seems to suggest pretty decent chances that we get to $100k-ish or more in this particular cycle... whether it goes straight up from here in a kind of one shot that looks like 2017 and brings us to $100k plus in the upcoming year (2021) or it perhaps follows a 2013 kind of model that has two UPpity periods and a bit of a long correction in the middle or it could follow an alternative path too..

In any event, anyone invested in BTC should be prepared financially and psychologically for a variety of scenarios, including a possibility that the next UPpity cycle drags out longer and lower than previously expected or suggested by the stock to flow model.. or the other models such as the four-year fractal or the exponential s-curve adoption based on metcalfe and networking principles..... that are somewhat accounted for in the stock to flow model, too.

JayJuanGee, there is no point replying you here as I went full retarded. My life is ruined, I am going to sell at the top and start afresh.
/s

I said the model would work either way so there was no reason for you to show-off.

At least you admit it.. so you are stepping in the right direction.. good luck with your sale "at the top."

I am sure that you will call the top, after it had already happened, and then say that is where you sold, blah blah blah... heard it a million times (or close to a million times).

 :D :D :D :D

Looks like you're developing a reputation for developing arguments here. I'm just here for honest talk.

The dates I pulled are very intentional, their as precise as the dates used in the chart I included in the post. The dates I offer correspond with the price highs in that chart (the thick multi-colored line). People are talking about the next logarithmic peak happening very soon, I don't think it'll come that quickly. I think it'll take longer to get there than we've seen in the past...just based on the data.

Try not to lead with insults, and always be hodling.

What do you know, you patronizing fucktwat?

Does your kind of vague-ass purported "honest talk" ramblings make you feel MOAR better?  Lovey dovey and contributing to the bitcoin dialogue?



Your dates are vague as fuck, and my earlier response should have already highlighted the problematic nature of the way you framed this particular matter.


Does someone have to hold your hand and guide you through some kind of more representative and honest presentations... look who is the argumentative fuck who fails/refuses to present honest and specific information.


Good.  Let them talk.  There are all kinds of wrong people in this space spewing out guesses... maybe you should disclose who these supposed people are?  might be helpful, but I doubt it.. random peeps say all kinds of nonsensical shit.



Good look at you, the realistic contrarian.. starting to impress because you are NOT just going along with the claims of random unspecified peeps..

I am very proud of you.


Get where?  Where are we trying to go?  Have you put forth a theory yet?  Last I saw was that you were asking a question about some vague dates and vague data that you set forth.  I did not know that you had a theory, too.. No wonder you were setting forth nonsense information because you were not attempting to get the facts to talk, but instead you were attempting to spout out some kind of theory that you have.  Maybe you want to explain that?  Since you like to put things out there and let them dangle.. may was well have one more vague piece of half ass theory dangling out there... would not hurt to have one more, right? What is one more lame, vague ass theory in the whole scheme of things?


Oh, and now you are giving advices, too.. whew.. You seem to wear many hats, especially accounting for the niceness of peeps on the interwebs.. we should all be nice to each other, right?
 Even to guys who spout out nonsense, right?  Looking good, HabBear.... Looking good.  ;)

You can not be serious, come on. What part of my sarcastic reply was not clear to you? I was joking, Jay.
https://i.imgur.com/MsrEcvr.jpg
Don't you see that even Donald J. Trump confirms the validity of the Stock-to-Flow Model?

I got you buddy, No need to be serious at all times but it is a natural reaction of any members to comment about it. No one could tell actually on what you meant about your sarcastic posts but you had already defended it in your case with your replies.

Anyway, in my opinion selling bitcoin while knowing the OP's post on stock-flow model seeing bitcoin liquidity of bitcoin supply in the future will be go down. As it was already predicted and the ATH could attract more bitcoin investors and we do not know what will going to happen on what development of that bitcoin will make.

Must be your way of extending an olive branch, acquafredda.   ;)

Regarding donald trump's support of stock to flow's predictive model... fuck that guy - he don't know nuttin about nuttin.. even if he may consider himself a perfect genius.

I have frequently attempted to supplement my explanation of how to explain price pressures on BTC, and surely some peeps might suggest that stock to flow is a totally comprehensive attempt to capture whatever dynamics are present to attempt to predict BTC's price direction and the pressures upon its price.  I still like to suggest that the four-year fractal model (which is merely the overlaying of previous four year patterns) and exponential s-curve adoption based on metcalfe principles and network effects also are influential to the stock to flow model in such a way that they need their own separate explanation - even though some may argue that stock to flow already captures those concepts.  I still like to present them as a threesome set of ideas... and also to say something like this: "who fucking knows what will happen, but the combination of these three BTC price prediction models give pretty decent ideas of what might happen better than any other models and better than just throwing your hands in the air or otherwise guessing."

You see it, eventually some common ground to be shared together. I will be burying the hatchet and I hope you will do that too.

After finishing the Bitcoin Standard I came to the realization that what Saifedean Ammous says about bitcoin truly supports what is going to be its deserved and inevitable success. Whatever the model, bitcoin will revolutionize the world we live in, but I agree with you that all the ones you have mentioned are certainly complementing each other.

New ATH, everyone get excited about that, but really nothing we all  didn't see coming:

https://talkimg.com/images/2023/05/16/blobc39717d52cd82099.png

We are pretty much in line with Stock to Flow model.
The fun has yet to come.

Is that magic? It could be!
As of today that is the most accurate model one could have ever produced for bitcoin. We're set to reach the next stage which is $100k.
Look at the bitcoin shortage which is happening in every exchange. Corn hunger.
Unbelievable.

I definitely agree that the stock-to-flow model seems to capture a lot of the btc price dynamics, and surely no one should be leveraging out of reliance upon strict interpretations of the suggested BTC price direction from the model, but also the model should also be able to demonstrate that leverage is not even really needed to become richie as fuck - even with relatively modest amounts invested.

Surely many of us likely recognize that some people do happen to have cash flow problems, whether it is due to youth and still building their income, or due to being in a situation in which they have never really been able to build a large disposible income or maybe other cashflow situations that they had caused upon themselves by making bad bets or using debt for consumption goods rather than investments, and because of these kinds of different people, the ones who have higher cashflows and discretionary income (and value) are going to be able to profit more from likely btc price dynamics - as long as they see the value and they take some kind of meaningful stake in bitcoin even if it is ONLY 1% of their investments.

Funny that these days there are a lot of recommendations to invest way heavier in bitcoin, and usually my top end of the investment was to invest up to 10%, but I can see the justifications for investing more and just find it ironic that so many people are so much more bullish than my historical approach.. even though I still stick with a 1% to 10% investment allocation into bitcoin as my starting recommendation, but of course peeps can customize their allocation once they become more familiar with bitcoin and even are forced to really look at their own finances to figure out how much would be reasonable and/or prudent for their BTC allocation.

Another interesting fact about S2F model: while the model seldom predicted lower values for Bitcoin, than actual market price, on the upside this has been quite conservative.

Consider this following image:

https://talkimg.com/images/2023/05/16/blob6fb827005481b6c8.png

The horizontal line is the level of 1 for the S2F multiple. What does it means?

• A multiple =1 means that the ratio Market Price/Model price is =1: this means that model predicts the market correctly.
• A multiple >1 means that the ratio Market Price/Model price is > 1: this means that model predicts a price below the current market price. Market is overshooting, model is cautious.
• A multiple <1 means that the ratio Market Price/Model price is < 1: this means that model predicts a price above the current market price. Market is lagging, model is optimistic.

If we consider the orange line, the one considering the more stable 463days S2F, we see that the market overshoot the model  to 28 maximum, then 14, then 3, in the various price cycles. on the downside the model have very less explosive behaviour, and the minimum level lies at 0,49.

This means that the market never fell below of 49% of the forecasted price.

If we believe the model is reliable also on the future, then 11,000 USD is never to be seen again.


EDIT: The above post got a like from PlanB on Twitter. My life is now complete!

Stock-to-Flow Model:


why does that sound so click baity?

Because your are likely seeing what you want to see from a likely perspective of a bitcoin denier..  or perhaps a shitcoin bagholder or perhaps a no coiner, or perhaps a fence-sitter (precoiner - better perspective).  

One or more of those are the more likely of explanations for why you came up with such nonsense superficial assessment, and seemingly not even trying to understand anything beyond some kind of superficial idea that you likely made up in your vacuous noggen.  

As I said on the last few weeks, new ATH are not surprises, as market has been following the S2F model quite closely.

Something new happened wit this ATH thou:

https://talkimg.com/images/2023/05/16/blobead611d5a187de58.png

New ATH is slightly higher than model price!

https://talkimg.com/images/2023/05/16/blob1411e35e8589cac7.png

The S2F multiplier >1 means that the market is actually higher than S2F model!


This is not to be considered a trading indicator: even if we are quite behind in the halving cycle, I think we will see higher S2F multiplier levels, but  this do not imply an immediate correction!


EDIT:
Actually @PlanB tweeted the same observation!

https://twitter.com/100trillionUSD/status/1342849642531328001?s=20

@100TrilllionsUSD celebrates the 2020 with the following tweet:

https://talkimg.com/images/2023/05/16/blob36735723bb41cac0.png

https://pbs.twimg.com/media/Eqj20KXXEAAudt4.jpg
https://twitter.com/100trillionUSD/status/1344600849243320320?s=20

This tweet references to the Stock to Flow Cross Assets model, where PlanB describes various assets acting as a Store of Value all lying on the same S2F straight line. As Bitcoin is becoming scarcer and scarcer it's moving up on the line.

https://medium.com/coinmonks/a-little-math-and-a-bitcoin-forecast-bcaddc17d252

here is a good analysis by Pisu on medium, that is proving S2F theory, and provides additional analysis regarding growth, taking in account actual data, and current S2F formula provided by PlanB

I will attach two graphs from the article, first one is analysis of growth phases from last halving cycle (2013-2017) and this one (2018-2021), where one can see how this curves are similar and growth is related to exponential curve (linear on logarithmic graph), until the halving, and the double-exponential after the halving, since both increased demand and decreased supply are taken into account and the actual BTC price is following the curve, with some exceptions, that could be seen as small bubbles during the road (we are actually in one of them, judged by the graph)

and here is a second one, where updated S2F formula graph is compared to actual data and @pisu666 graph, and one can see that actual target for 2021 is a little lower than $288k, but much similar to it

according to article and financial theory, each double-exponential growth is seen as a bubble, but BTC will get to those heights again in next halving cycle, due to constant exponential growth

interesting article, but certainly not financial advise, what is your take on this @fillippone

I’m highly sceptical on this article.
The real big difference between this article and the stock to flow is the fact that stock to flow has been able to reliably forecast bitcoin prices since 2012(before the first halving), while this “model” has been back tested on data, but don’t provide any rationale with actual prices on why price should follow an exponential curve.
So, nice read, but I fail to understand: looks like a good fit, but why should it hold in the future?

does not have to hold in the future, as any other calculation for price or a model, just like PlanB did not have to, when published, but seems to be holding up to this moment, and parameters are adjusted during time to reflect actual price change, but formula is good for now

thank you for opinion, it is good to have some reflection on each read, for a better understanding of what is happening on the market

PlanB has been interviewed for the fifth time by Stephan Livera!


https://twitter.com/stephanlivera/status/1350046657090523136?s=20

https://pbs.twimg.com/media/ErxT2wOVQAIHsFw.jpg



What they talked about on this podcast:


You can listen to the podcast clicking here (https://stephanlivera.com/episode/243/)


Previous Stephan Livera podcasts with PlanB

Not only are the Italians passionate, they are also quick... (hopefully not too quick or many of their ladies will be disappointed)

Sure enough, I looked at my podcast feed, and I saw the header of the PlanB as SLP's guest.  I will listen to that interview later today and see if I have any comments to add here...  I will say that I have heard PlanB's previous interviews on SLP (probably all the previous ones - even though I would probably learn a lot by listening again.. but there are only so many hours in a day)...  

Edit:  I listened to the one hour long podcast interview, and besides the topics listed above largely I would conclude that PlanB was reiterating that the stock to flow model is largely on track and maybe a bit above expected performance at the time of the interview, but not out of line with how any model may well have deviations from the mathematical expectations.  It might well be noted that he believes that both his model and BTC price performance is providing a decent amount of evidence that the increasing cycle theory is bullshit (hahahahahaha.. he did not use the word bullshit, but still)..    Also the priced-in theory as a frequent S2F model criticism seems to ongoingly undermined by BTC price performance ongoingly correlating with the stock to flow model rather than nonsensical priced-in baloney (again, PlanB did not phrase it like that, exactly.. he was more diplomatic than me).

Interesting tweet by Plan B.
He superimpose fractals, with two different versions of his model:


https://talkimg.com/images/2023/05/16/blob765adbffd28139fe.png (https://twitter.com/100trillionUSD/status/1357638054815621122?s=20)

https://pbs.twimg.com/media/EtdKqTDXEAEeCDI.png (https://pbs.twimg.com/media/EtdKqTDXEAEeCDI.png)

In any case, interesting times ahead.

Pre-halving, I was a huge skeptic of this model, but right now I'm in total awe that the model is currently actually accurate as hell. The model is literally being followed like clockwork.

What I'm not sure, is if the model is just really really accurate, or if at this point it's just ended up being a self-fulfilling prophecy. That, and up to what point will the model actually be followed. Because at some point in the future, I expect the model to be invalidated. Regardless if it goes far higher or far lower than the model expects.

I believe the model will be accurate as it is based on supply / demand, stock to flow ... how many coins are being mined, how many are available. It's a broad general model that constantly gets adjusted of course, it is not static.

So it will get updated every halving, which is every 4 years. Beyond that time frame, no one's predictions are really accurate.

The so called "end game" implies an absurd number for many people of at least 10 million to 50 million to 100 million USD, but that is very far away, likely several decades from now.

@PlanB updated onte of the most bullish chart, and the one I like the most!


https://twitter.com/100trillionusd/status/1361276566756540416?s=21

This is one of the most intriguing S2F graph, because, as we already commented, means BTC is actually gaining when measured against the most resilient SoV: Gold.

This means that Bitcoin is finally becoming a viable Store of Value and is taking premium from Gold,

PlanB further details on the matter answereing in the comment:




I tend to agree with the first hypothesis. And I am rooting for Bitcoin sucking up all the store of value functions from less than optional other SOV, sending them back to their industrial value...

Gold will remain as scarce jewelry, although I personally like silver / platinum better. I actually prefer either stainless steel or tungsten because they are so physical and will endure, not melt under high temperatures.

In audiophille hi-fi systems, silver conducts better than gold, so there are silver interconnects. I honestly can't tell the difference and copper is good enough for me, as my source audio is digital anyways.

Maybe in 100 years, the only SOV left will be digital ones, mostly BTC, as they can be made "physical" in the form of paper wallets, or collectible coins, or open dimes, or steel stamped private keys or something such.

Once we start going out to space, mars, the moon, anywhere, all these precious metals will just be another element in the periodic table and not be rare enough. They will be useful and have function and value, but they will be everywhere.

This is why Bitcoin is immensely more precious than Gold: it’s scarcity is based on cryptographically secured math, not on the randomness in finding a nuggets in this or any other planets.

All this will take a certain amount of time and we will not forget about such a concept as economic feasibility. Also, rarity is a relative concept and for the future bred population of the current precious metals may also be few or other metals will be used as precious metals. For example, now palladium is more expensive than gold, and before that, platinum was in a similar role, although of course gold is in a special position due to historical reasons.

Here is the thing: if the price of gold goes up, what happens? The gold miners become more effective and mine more gold.

If the price of bitcoin goes up? The bitcoin miners still mine whatever is the limit based on the difficulty. It's still only one block per 10 minutes. And we will never have more than 21 million.

The 14th halving will happen sometime near 2064. The block reward will be 0.003 BTC. By the next halving after that, there will be only 20,999,359 bitcoins.

Some of us may still be alive to see that year.

Not considering the fact that new gold mines could be discovered anytime or, if that crazy Elon starts searching the space, a huge space gold rush could well start.
Yes, with bitcoin that is out of option: we cannot have more than actually designed by the protocol.

Today Bitcoin surpassed, for the first time in history, a market capitalisation of 1 Trillion of dollars:

This is not a finish line, but a good start for the next target: Gold Parity.

https://twitter.com/100trillionUSD/status/1361965084831064064

This graph is from the Xasset Model, where PlanB shows different asset classes, with different S2F lays on the same straight line.
Bitcoin, whose S2F is slowly moving to higher and higher levels, is moving across the line.

Hey, am I reading that graph incorrectly? The way I see it, according to the graph we should have passed the silver market cap but in reality we haven't done so yet. We are approximately $0.5T short.

I don't know if I'm wrong or that chart has old data not updated.

According to his article:

https://medium.com/@100trillionUSD/bitcoin-stock-to-flow-cross-asset-model-50d260feed12



The original link in the paper is broken, but you can check it here:
https://www.cpmgroup.com/how-much-silver-is-above-ground/

So your sources are probably different from his.

Hey, no. As I was thinking, that article is from back in April. Since then Silver Market Cap has more than doubled.

https://companiesmarketcap.com/silver/marketcap/

"Silver's Market Cap

Estimated Market Cap: $1.496 T

The Market Capitalization of Silver is currently arround $1.496 T.

This value was obtained by multiplying the current silver price ($27.37 per once) with the amount of silver that is estimated to have been mined so far."

A good website to follow Bitcoin market cap vs other assets is:

https://companiesmarketcap.com/assets-by-market-cap/

https://i.postimg.cc/3NYCHcjS/companies-market-cap-20022021.jpg (https://postimg.cc/ygpSmnbc)

As you can see we aren't there yet but I don't think it will take too long with the current trend.

Very good point.
In addition, the source of the website you suggested, is the same PlanB used in his article, so market cap is directly transferable into his model.

On the big picture anyway anything changes, but I reckon all the dots should move also.

I will try to tweet him. Let’s see what happens.

That is great news with only one caveat dear filli! Gold parity not referring to price please!!! ;D In terms of capitalization we will get there in around 10 years at this pace.
If the institutionals are followed by smart retailers we can get there very easily, not mentioning that many gold bugs could convert to crypto some % of their holdings.
It is doable.

When I say gold parity I am thinking about t market capitalisation. As we now are at 1Trln while gold is at 11 Trln, then I am saying that in order to achieve this price must improve tenfold (neglecting the effect of newly mined coins).
So, in this sense also price is involved.
Hope it clarifies, @acquafredda.

Yeah, I know what you were referring to, sometimes I like to make stupid jokes  ;D
By the way, I found the pinned message of Digitalik.net https://twitter.com/digitalikNet/status/1210251305568161794 and I fail to get why it says it predicted 90k in 2020.
Was the model changed at some point? It looks different now, have I missed something.
I know these are only predictions but I want to understand the logic behind (see image below)
https://pbs.twimg.com/media/EMutJPRX0AEcsM5?format=jpg&name=4096x4096

I think they are referring to the 10 days lag model.
Of course, imagining the price adjusting for the new S2F in 10 days only, I think is a little bit optimistic. So better to consider the slower 463 days (updated from the 365 days on the graph).

Anyway, yes, bear in mind that picking too old messages can get you on different versions of this model.

I feel kind of tricked now ::) I supposed the model was consistent all along... or maybe I failed to get its logic in the first place (which is also absolutely possible).
Thanks for the clarification as I could not understand how to relate those two graphs into the same context.

PlanB is taking pride in his model working flawlessy month after month.



https://talkimg.com/images/2023/05/16/blobb7a781f2c63ca1d8.png (https://twitter.com/100trillionUSD/status/1367065337246715904?s=20)
https://twitter.com/100trillionUSD/status/1367065337246715904?s=20

The blue dots were known at the time of publishing his first article
The red dots came after it.
The model is confirmed working.
No big surprises here as the model has been working since 2011, well before the first halving.

Bitcoin's Stock-to-FLow model is awesome and it's being used very well by Sushi. There is less Sushi in exchanges over time because they have stakes in liquidity pools. Bitcoin's deflationary model has brought success to Bitcoin as its value continues to increase over time.

He can that all that he wants for what it is worth. If PlanB continues to work and follow the model as intended who are we not to pay tribute to the 100trillionUSD man?
My only concern, I have expressed earlier on, still haunts me a bit but I guess I am overthinking it too much.
Keep calm and carry on.

Nah, as I stated in OP this model do not apply to shit coins (or shit tokens).
Sushi being taken off the exchanges has nothing to do with scarcity. It might be about demand and supply, but this doesn't mean sushi is scarce at all.  So I can't even understand why it is relevant here.

I think that mining happens because of demand and whether or not any altcoin with a deflation pattern will increase in value.
Sushi is a token but it is mined through being taken out of exchanges and locked to continue making Sushi. Sushi mining becomes more difficult because its algorithm reduces the amount of Sushi tokens generated over time.

The value of Bitcoin, gold or silver increases as they are stored and taken out of exchanges.  So I don't think it makes any difference in terms of how scarcity is created.

Indeed there is difference.
Diamonds are not scarce, their scarcity is artificial, as the only provider is hoarding all of them in their caveaux.
This is artificial scarcity, as supply is constrained artificially.
This could well be reversed at once, if De Beers change their mind.
Bitcoin scarcity is coded in the algorithm, and secured by network nodes.

It is important to note, from time to time, that a variety of shitcoins, whether we are referring to sushi or some of piece of crap scam project, may well engage in a variety of tactics to attempt to imitate bitcoin and some of its features, and part of their appeal for some folks is that they are not able to determine the various differences between shitcoin 1, shitcoin 2, shitcoin 3 and bitcoin, so really those various shitcoins deserve to be analyzed in some other thread, and sure they might try to apply stock to flow modelling and a variety of factors, and perhaps in the end there might be some shitcoins that might stand up to scrutiny, including live tests with the passage of time (though I doubt it), and in the end, likely ONLY one or two differences or even testing out how the various shitcoins play out with a bit of load upon them in the real world will end up showing that they are lacking, whether it is scaling, or lack of transparency, or lacking in various kinds of network effects such as distributed mining or distributed development or liquidation avenues.. ...so fuck the premature (misleading) attempts at trying to draw parallels between various shitcoins and bitcoin in these kinds of threads, and take those analysis attempts, to the extent that they are genuine at all, and play them out for a year or two (minimum) and then maybe at some point, there could (perhaps?  I doubt it) be some abilities to hold them up to some of the bitcoin features, characteristics, built -n incentives and/or price dynamics.

Bitcoin’s stock-to-flow ratio increased drastically in May 2020 - after the last halving. By contrast, gold’s stock-to-flow ratio was only insignificantly higher last May. If the May 2020 stock-to-flow ratio for Bitcoin was factored correctly into the model, a vertiginous price of $90K is yet to be explored.
Hold on.

A good model is one that is capable to forecast the future.
Well, according to this tweet of PlanB, S2F is one of those models, as the "out of sample" points, or the points NOT used to calibrate the model, are well forecasted by the "in sample" points

https://talkimg.com/images/2023/05/16/blobc57d8b15cfa507bf.png
https://twitter.com/100trillionUSD/status/1380456734725173248?s=20

The blue dots are the monthly data used to calibrate the model. The red ones are the ones realised after the original model has been published.
They follow the model white line like a clockwork!

First time I read your topic about PlanB and stock-to-flow, I really though it's way too optimistic (I am usually a bit cautious about BTC predictions, some would say even too much) but looking it at the current situation where market  follows it, gets me really excited. Even I started thinking that $1 million by 2025 is possible.

Anyway, just saw a PlanB tweet where he is even relieved by this last correction. Looks like BTC pumping the eay it did so far was too much even for him :D

https://i.postimg.cc/t46hKjqL/ss2.png
https://twitter.com/100trillionUSD/status/1385496730200907776

Frequently, I have stated that the considerations of the stock to flow model need to try to retain a decent amount of flexibility in terms of how much BTC's actual price performance needs to be allowed to deviate from the predictions and still be allowed to have predictive value because the model surely seems to be striving to achieve predictions based on data (data-driven)..

So, sometimes it seems that even PlanB communicates in ways that are too locked in and seems to get caught up on what the model had previously stated rather than whether there might be deviations from the model that would justify tweaking it and continuing to allow it to be data driven and merely a guide rather than some kind of sorcery.. which I get a bit hostile when anyone is trying to be a sorcerer or to suggest that some model that they have retains some level of sorcery status.. even though we certainly can recognize that some models are much better than others, and the stock to flow model does seem to be amongst the best (currently and based on current data that we have).

One of the things that I like the most about the S2F model is that it has the answers to everything, for now the market is going through a correction, some think that it can reach almost 35% of the correction, so far it is 25%, But one of the last publications that I have read, for this 2021 there is still more to go in a bullish sense:

This Was Not the Top of Bitcoin’s 2021 Bull Run, According to PlanB

https://i.imgur.com/7Vsjbz0.png

Source: https://cryptopotato.com/this-was-not-the-top-of-bitcoins-2021-bull-run-according-to-planb/ (https://cryptopotato.com/this-was-not-the-top-of-bitcoins-2021-bull-run-according-to-planb/)

The best thing about all this is that it is very possible to see the price of Bitcoin at $ 288k, everything points to it.

I don't believe in his S2F model TBVH but yeah, I can say that it's quite impressive here to see so many charts about the same and like LUCKMCFLY said, S2F has answers to almost everything but not the worst possibilities that may take place once the need of humans arise after a steep rise in inflation that's definitely going to take place considering the current amount of deaths taking place and evolving Coronavirus and its increasing number globally. This is such naturally (dead yet) powerful thing that can't be ignored and for the same, people will definitely want money to survive and for that, they'll try to FOMO sell after seeing a 27% dump in a day. I'm not bearish on BTC, but everyone here forgot a fact that BTC has gone dead a lot of times and it can again die till an area nobody would have thought of, before rising up again as a new Dawn. At that time, this S2F model will become valid again but I believe that things are going to change this time.

You mentioned several macro factors, current events and even public sentiment, but one of the aspects of stock to flow remains that it is NOT really accounting for the various factors that you mentioned, including that some peeps have criticized stock to flow by asserting that it fails to account for a variety of factors, including demand.. and it kind presumes steady demand.   I think that in the end, stock to flow is going to prove correct because it seems to largely be identifying the most important factors of bitcoin that likely drive bitcoin's ongoing price appreciation and dynamics and kind of shows why the honey badger does not seem to give a damn - meaning it does what it does in spite of a lot of factors that people try to measure and who either fail/refuse to account for factors that stock to flow emphasizes and largely seem to be what is actually driving bitcoin's price.

The correlation coefficient of the S2F model with underlying bitcoin price is north of 95%.
This means that every other factor influencing bitcoin has the power of explaining the residual 5%.
So you surely can adapt the model to take into account demand, mining hash power, institutional adoption, UTXO chain analysis, CSW claims, but all those factors, that are extremely difficult to factor in a model, would add only a tiny fraction of explaining power.

In addition remember that factors that could affect the price,m right not be taken into account on a model. Take the Black and Scholes model, where demand is not taken into account to determine the price of a derivative.

i find it real funny

most of the math that make up 'stock to flow' metric is averaging a yearly price. .. of averaging a 10 day price
so when seeing the yearly average price line and then saying 'oh look there is a relationship to daily price'... OF COURSE THERE IS
the average is definitely going to be within a 5% deviation.. because the price is only on average 10% volatile (5%up or 5% down)


stock to flow is not predicting anything. its just reformatting a price into a new line thats not the daily price but an averaged price.. so yes ofcourse the line would be within limits of the daily price

if you use a true coin generation/circulation metric. that does not include a price average or any math including the price.. and then set that against the price.. then you wont see the same pattern or correlation

the reason for the S2F correlation vs daily price has nothing to do with coin generation/circulation amounts. and everything to do with the 'average price' math they added into the metric

Also i think that bitcoin does not fit in stock to flow model. Although Stock-to-Flow Model is applied on assets which have scarcity but i don't think bitcoin could follow this model because it is different in nature and also the demand of bitcoin is way too high. Bitcoin will rise much higher as predicted by S2F model.

Maybe I am understanding the matter erroneously, but if there is a suggestion that demand is meant to be held constant in the Stock to Flow Model because demand is a kind of "unknown" as compared to the other factors that are accounted, but if the demand ends up being much greater than the constant rate that the model assumes, then the model ends up considerably undershooting expectations.

And yeah of course, I appreciate the assertion that was made by fillippone in regards to all of the other factors ONLY adding up to less than 5% explanatory value but if the demand constant is actually more wrong in the future than it had been in the past, then the explanatory aspect of the demand value or even the whole model ends up becoming less than 95% because it failed to adequately account for a value that ends up changing in the future.

Stock to Flow lands on the most nichilist, turbocapitalist website of the street: ZeroHedge


What Is The Stock-To-Flow Model And Why Do So Many Swear by It? (https://www.zerohedge.com/crypto/what-stock-flow-model-and-why-do-so-many-swear-it)



ZH relaunched a Decrypt.co article (https://decrypt.co/68847/what-is-the-stock-to-flow-model-and-why-do-so-many-swear-by-it), illustrating the basics of the Model.
Nothing new for the avid reader of this thread, but obviously a step forward in educating people on the value proposition of bitcoin.

S2F needs this kind of exposure and apart form the modeling itself, it could easily become a self-fulfilling prophecy. Right now, S2F's been moving like a clockwork machine. If you zoom out the chart you can see how the price bounced on the Stock/Flow Light Blue line.

 

When you read about stock to flow on Forbes, you feel the noises of the bitcoin newcomers at the gates!

Demystifying Bitcoin’s Remarkably Accurate Price Prediction Model, Stock-To-Flow (https://www.forbes.com/sites/stevenehrlich/2021/04/29/demystifying-bitcoins-remarkably-accurate-price-prediction-model-stock-to-flow/?sh=7ca520fe476a)


The article is a good read, it poses a few questions partially answering them. The good reader of this thread understand how to answer those supposed fallacies of the model.
Definelty you can read it and address to your new liner to tickle them.

I realised I didn't notice this last Episode of Stephan Livera with Plan B.


https://talkimg.com/images/2023/05/16/blob79f5708c4471d23b.png (https://stephanlivera.com/episode/243/)
https://stephanlivera.com/episode/243/


This was by far one of the most intriguing podcast.
I strongly recommend you to listed to the whole podcast, but here one excerpt from the transcripts ( I think Stephan messed a little bit with the transcipt, waiting for him to fix them).


Cash and Carry


A lot of very interesting topics have been touched, I stongly recommend the whole episode!

its no prediction model. .. its more representative of a daily price vs average price
the whole stock part becomes meaningless as that is not really shown in any accuracy at all

so..
go take that S2f chart. grab the line data.. and remove the 'average yearly price' element..
then redraw the line without the price metric in the stock line. and see how suddenly it doesnt fit a pattern
then you will see its the 'average price' thats correlating not the stock change

or..
take any price chart
then take any other random factor n the universe. like the phases of the moon or ocean tide times..
add in the average price metric into this random factor.
and guess what you can make ocean tide times seem 95% accurate to the bitcoin price

Sorry, I don’t get your point:
Has your model linking the ocean tides with bitcoin price the following features

• stable parameters calibrating the model over different time windows
• robustness in out-of-sample forecasting

If so, can you share with us?
I guess these are the unique feature of the stock to flow model, who gives us a good probability we are not looking at spurious correlations (something your post seems to suggest).

Nice to see the Stock to Flow model not being violated in this dump.
The stock to Flow model has been undervaluing Bitcoin Market price.
Looking at the multiple Market Value /Model Value, we see that, while the maximum market value has been over 23 times the model price (only 3 times after 2017) during market pumps, the minimum value has never been below 0.5:

https://talkimg.com/images/2023/05/16/blobbaf5654b8169fe24.png (https://stats.buybitcoinworldwide.com/sf-multiple/)


This means the market value has never been less than half of the model value.

According to digitalik.net, currently, the model prediction is 56,000 USD:

https://talkimg.com/images/2023/05/16/blob658e385f5bc2b766.png

So, all is OK above 28,000.

Wow, During yesterday dip Market got to 29,000!

Almost perfect.
Maybe too much perfect.

PlanB came out ot reassure everyone about his model:

https://talkimg.com/images/2023/05/16/blobcd486bb0c939e1a5.png
https://twitter.com/100trillionusd/status/1396530823910789128?s=21



Here there are the 4 images in the tweet:

	https://pbs.twimg.com/media/E2C_ZcCXEAAYQXS?format=png&name=large	https://pbs.twimg.com/media/E2C_ZpyXIAEOCgl?format=png&name=large
	https://pbs.twimg.com/media/E2C_Z3LX0AAZV2o?format=png&name=large	https://pbs.twimg.com/media/E2C_aHEXIAI29ux?format=jpg&name=large

According to PlanB Price staying multiple months below 32K would mean the model broke.
So it is not an "instant" no go, but it is a prolonged stay below a 0.5 Stock to Flow Multiple.
Speaking of which, I have to figure out why the model price on this website is slightly different from digitalik.net.
I asked @PlanB himself in the comment, wondering if he will ever answer.

I do not think it is a question of how much the model has to reassure but rather of how much it represents the probable evolution in the future under certain conditions. It should not become a model of faith, there is no scientific truth behind it and I say this both to avoid future disappointments and for a bit of superstition that never hurts.

Seeing this thread, I immediately remembered that I had a document with a similar name on my PC for about 4 years ^{[Bayesian regression and its efficacy for predicting].} And the strangest thing is that I found only one mention on the forum (I guess I downloaded this document when I first came across it ... and forgot about it). Perhaps when I am less busy (it will be interesting for me to figure it out too), I will briefly describe this method in more detail, in the meantime, enjoy ...

• https://arxiv.org/pdf/1410.1231.pdf

Nobody who bought #bitcoin and Hodled for 4+ years (200 weeks) ever lost money, EVER.
Time to always put things into perspective.
Bitcoin cannot just increase its value by tracing a straight line.
Think about it: do you prefer a flat, monotonous life that takes you to the grave, or do you want to take part in the great rollercoaster that is life?
This is Bitcoin, always remember perspective!

https://pbs.twimg.com/media/E2d7rf6WUAM06Uk?format=png&name=large

https://twitter.com/100trillionUSD/status/1398222204123426816/photo/1

I don't really disagree with you acquafredda - even though I would frame and even qualify matters a wee bit differently.

Sure, the bitcoin price has always been higher in any given time that is 4 years later.  Does not guarantee that such facts will continue to play out, but the past pattern of continued UPpity including even demonstrating that anyone new to bitcoin could buy at any price and have pretty decent assurances that 4 years later they will be in profits - even if they were to buy at the tippity top of whatever price exponential price rise blow-off top that has occurred.. and historically, this has worked out every single time.. so far.

Rather than calling bitcoin a rollercoaster of life, which is NOT untrue, I would suggest that what seems to be happening is the greatest wealth transfer in the life of man, and likely happening and continue to happen in a relatively peaceful way.. sure there will be some violence and battles along the way and even casualties, but there are also likely ways to lessen chances of being a casualty of such great wealth transfer and instead be a beneficiary of such wealth transfer.. even if happens to be a relatively poor person can stack sats in such a way to increase chances of being able to benefit a lot from such wealth transfer and maybe even spreading such wealth transfer across more than one generation as long as getting in, stacking sats, hodling, valuing wealth in bitcoin, etc etc..

And I do not disagree with you either, all the points you mention are true. I also tend to think as if Bitcoin could represent the greatest democratic money transfer in the history of human beings. Never before bitcoin it could have been possible to reach a wealth status only achievabel in generations.
I could not have been able to save they money I did with bitcoin, without bitcoin.

Ain't that the truth.

There are seemingly a couple of aspect of bitcoin that have been very good for individuals and/or normies that had never really been previously available to such folks absent some quirky luck, which is being able to get into bitcoin without having a lot of capital, connections and/or time constraints.  Even getting in "early" for that matter.. without really being able to know for sure if it is "early" or not or if it continues to be "early" or not.... and even now, many of us are still proclaiming bitcoin to still be early even though there seems to be some ongoing resistance to the idea of either bitcoin being currently "early" and failure/refusal of a lot of normies to take action to get a stake in what seems to be a currently still "early" asset. 

Another aspect is BTC's historical price appreciation which those kinds of price appreciations had historically been reserved for insiders and/or folks with a lot of capital and connections... So, even relatively small investments into bitcoin have ended up allowing for situations in which some peeps were able to become way better off, become rich or to get rich as fuck in a relatively short period of time.  There are varying ways to play the fact that BTC has had a kind of overperformance component in the longer term in spite of seemingly scary ass short term volatility, and not always needing a lot of capital to profit a lot but of course, some of the more aggressive approaches in terms of investing in (rather than trading) would have increased chances of profiting even greater.

Of course, some of these seemingly great advantages with such a seemingly great UPside asymmetric asset class still can end up getting badly played by some of us normies in terms of NOT taking advantage of good situations that might be staring us right in the face by investing way too little, or leveraging and fucking up our investment through those kinds of gambling plays (that have been shown to be largely unnecessary in bitcoin in order to possibly get richie) or selling way too much BTC too soon.  So there could be some luck involved and/or at least some ideas of ongoing consistent and persistent hedging into bitcoin that ended up allowing for some otherwise normie poor peeps to become way better off, rich or rich as fuck.

Is this deviation from the topic?  Hm?  Maybe, maybe not.  Stock to flow remains one of the very important and seemingly currently valid BTC price prediction models that help to inform some of the BTC accumulators and HODLer  ideas about likely direction of the BTC price, and I personally suggest that planb/stock to flow is not necessarily saying anything different from some of his predecessors, but some of the input of the data and organizing it in a certain form has contributed quite greatly in terms of helping to discuss BTC price dynamics and likely future direction based on past performance.  Of course, stock to flow incorporates 4-year fractal, but I like to list 4 year fractal as a separate model and I also like to list s-curve adoption based on metcalfe principles and network effects as a separate model too.. just so some conceptual points can be emphasized and reemphasized, even if redundant in parts.

It might be a good idea to switch to new S2FX that is stock-to-flow model updated with cross asset that may be even more precise than regular S2F model we used so far.
PlanB removed time and included other assets like Gold and Silver in his calculation formulas, you can check his reasons for doing that in his medium post (https://medium.com/@100trillionUSD/bitcoin-stock-to-flow-cross-asset-model-50d260feed12) and go visit new s2fx model chart:
https://stats.buybitcoinworldwide.com/s2fx/

I guess those two models are quite different.
But as you correctly say, S2FX removes time from the model, comparing stock to flow across assets, and not across time.

From the SLP243: (https://stephanlivera.com/episode/243/)



In the graph you posted, instead, there still is a time axis, so I'm not entirely sure what it is really plotted on that graph.

Excellent post by PlanB

https://talkimg.com/images/2023/05/16/blob41563efcd68853fb.png (https://twitter.com/100trillionusd/status/1399723142101323780?s=21)

Well, once again he's referring to something he has stated on the last Stephan Livera Podcast:

Here the relevant passage: Stephan Livera [08:19]: And so probably it’s a good point also to discuss some of the critiques of some of the modeling. The thing is, it’s kind of shifted over time, right? And I guess we’re talking about both the different models, but with the S2F, one of the interesting developments was this idea of cointegration, which then later it seems that part has now been shown that we can apply the cointegration test. From your perspective, what does that mean? Does it essentially just mean we don’t have the confidence that would have been provided by cointegration, but you believe that the model might still provide some high-level predictive power? Is that how you would summarize it? Or how would you summarize it?

PlanB [09:00]: A bit differently! By the way, I got a lot of critique on the models, which I also invited, because I think the models are only getting better if they’re open sourced and discussed! And the point you mention about cointegration was one of the more interesting and very intelligent discussions! I liked that very much! It’s important to know that it only applies to the first model — the time-series original S2F model — and not to the S2FX model. And what it basically does — it’s a measure that gives you some certainty that it is not a spurious regression, not a spurious correlation. Because there’s always a risk that you find correlation [but] that there is no causation or no relationship at all! It’s just a fake, fake correlation — that’s always a risk! And to be clear, that is still a risk! It could be, the relation between stock to flow, scarcity, and value, could be spurious—although every day that seems less likely! It is important to make that point! Now with cointegration it’s actually a test, and that test — if you apply it and it proves cointegration — then the less likely, it’s not certain, but the less likely the relationship, the correlation, is spurious, is false. So there’s a lot of probability that it’s a causal relation and a correlation that you can use for making predictions! But the discussion was quite interesting because it was actually held with a Dutch guy, an Australian guy, a German guy, and me! There were four people working on the same data and the same test. And first we all did the same test and the test clearly showed cointegration! And cointegration means that the series stick together very closely. The story about the drunk and the dog was made. The drunk goes on the street to walk his dog, the dog is on the lease, the drunk goes everywhere, the dog goes everywhere, but the distance between the drunk and the dog can never be longer than the leash! And that’s what you measure — the leash! They always stick together, and actually that’s what you see in the data! If you look at the Bitcoin price, it sticks to the model, it tracks the model really really close! And if you do the test, you also measure there is cointegration. But then the German guy said, Well, one of the assumptions of the test is that both variables are stochastic and not deterministic, so they should be random and not predetermined. And of course, stock to flow is predetermined! So we couldn’t apply the test! So although the test showed cointegration, theoretically and practically we cannot use it! But it clearly shows the moving of the price around the model. The test also shows it, but we cannot use it! Yeah, that was the end of it right there! You could say, Okay, we should use another test, or develop another test, because it clearly sticks to the model—the price. But on the other hand, it’s maybe best to be conservative and say that there is no cointegration and probably the relationship is spurious! So, that was the end of that discussion! On the other hand, if there’s no cointegration, it doesn’t mean there is no correlation. And the cointegration only works on the time-series model — so the original S2F model. By the time the discussion was at its peak, I introduced the other model, the S2FX model, and there of course you see an even higher R2, and even higher correlation, and we cannot apply the cointegration test over there. Yeah, that was a very interesting discussion at the time!

 

A little update today from PlanB on the same topic:

https://talkimg.com/images/2023/05/16/blobf6fb0271ba3e083b.png (https://twitter.com/100trillionusd/status/1402213619354456065?s=21)
https://twitter.com/100trillionusd/status/1402213619354456065?s=21

Here is a link to the original image:
https://pbs.twimg.com/media/E3WnxYHXIAMBN2n?format=jpg&name=4096x4096

Blue bands are the S2F model bands: the price is expected to stay inside the blue bands for most of the time. The more it stays outside of that zone (i.e. beginning of 2019) the more likely a pullback is expected.

All is still good with Stock to Flow.
The drunk man walks with his sill walking his dog on a leash:

https://talkimg.com/images/2023/05/16/blob460b694dc3baa79c.png (https://twitter.com/100trillionusd/status/1403701397774811138?s=21)
https://twitter.com/100trillionusd/status/1403701397774811138?s=21

Link to image (https://pbs.twimg.com/media/E3ryJu6X0AMR-Wo?format=jpg&name=4096x4096)

288K still in play. Hopefully. I am personally getting a little bit nervous with price fiddling with 50% of the model value for so long.

I do understand that if you observe that the BTC price is deviating a certain magnitude from a price prediction model, such as 50% below such model, and the deviation endures for a certain period of time, whether that is 3 months, 6 months, a year or longer, then likely the model need to be adjusted to take that long standing and relatively large deviation into account.

At the same time, I personally doubt that we should be giving too many shits about how far or how long that the BTC price might be deviating from such line (or expectations that are shown in the model), and any good model will just attempt to take that into account and to adjust accordingly.  Sure, one thing would be to conclude that the model is broken, and another thing would be to attempt to take into account of new facts (to the extent that they are sufficiently material and sustainable) to tweak the model. 

I give very little weight to any model having high degrees of certainty to future performance of something like BTC price dynamics which includes a variety of factors (including somewhat game theory plays of human behavior) that go beyond merely assessing historically how those various factors have affected BTC price... even while at the same time the stock to flow model does seem to contain a lot of extractability powers to show likely future performance by already had happened past happenings.

Of course, one question remains regarding how much deviation and for how long would be necessary in order to justify a BIG ASS tweakening of the model.. and even the worse case scenario of conceding that the whole model is broken.  Of course, Plan B does like to frequently and regularly plot new data points into the model in order that we are able to see how far we might be deviating from where the model says we should be and we should also be able to figure out long such deviation has been taken place - including attempting to assess whether such ongoing deviatening rises to a material and substantive level that justifies tweakening or completely reassessing the model in terms of maybe a shift in the line might become appropriate, at a certain point, and sure maybe there is some math that can be applied in terms of if the model is deviating for x quantity for y amount of time then a tweakening or rethinkening is justified. 

Any of us who attempt to appreciate the model can surely proclaim that it is the worst model out there, except for all the other models, and surely, I like to reduntantly describe the necessity to give weight to the four year fractal (which of course is already in the model), and considerations of how well is exponential s-curve adoption based on metcalfe principles and networking effects coming along - which is not contained in the model, but who cares, we can still assess the model in terms of thinking about those kinds of additional considerations.. and perhaps even saying that the model should be adjusted up or down because demand is higher or lower than we had thought--- blah blah blah... demand is not in the model, but still does not break the model to tweak it a bit, if necessary.. we do not seem to be close to being there.. but maybe I don't know... how long do you think that our staying 40-50% of the model or even going down from here and reaching higher levels of deviation would justify some kind of "oh sheeeiiittt, maybe we need a tweakening?"

Sure, the answer could get addressed, if the BTC price were to recover back into the upper $40ks and even into the lower $50ks, and we could proclaim, hey even though the price is still below where the model says it should be, at least we are not 40% to 50% where the model says we should be, so then the urgency of the need for a tweakening becomes less compelling to carry out.

Of course, I prefer UP to DOWN, so it would kind of suck to end up either having $64,895 serve as the high for this cycle resulting in a long period of down below what the model says that lasts for a year or longer, right where the model says we should be going UP, then we either go sideways or end up experiencing further correction that lasts well into the period where the model shows that we should be UP higher or going UP.  I personally still proclaim that it is a BIG so fucking what.  Don't get so goddamned attached to models predicting future performance and just try to plug those new facts into the model and see if some variation of it still works or could work.. in order to both account for facts.. and to give some kind of expectation of "where this thing might go." 

I know that I am rambling a bit, but I still think that we are going to need a pretty decently sized deviation from the model to take away our hopes and dreams of UPpity.... while at the same time, each of us better be taking these kinds of models with a large enough grain of salt in terms of both our financial and psychological expectations.

Apparently, I am not the only one getting nervous with Stock to Flow: PlanB is trying to spread some hopium, while market price still struggles to grow back above 50% of model value.

https://talkimg.com/images/2023/05/16/blobd3a4ff45cebd83c6.png  (https://twitter.com/100trillionusd/status/1406577006230245376?s=21)
https://twitter.com/100trillionusd/status/1406577006230245376?s=21

I don't know the fundamental reasons but he's going to publish an article later this year.

Those prices look weird to me: where they come from? he also predicted a small dip in August, due to worsening of "fundamental conditions".
I'd like to know more.

Im quite confused of what he meant with " weakness" in June and July but well some people ( tradingview ) are saying that we are going down in July probably below 30k. On top of that , he seems pretty confident with that tweet. He used the word 'my worst case scenario' instead of best case scenario so that show that he is confident with the price will not go anything lower than $47k on August , thats sick though.

So what would happen if somehow this S2F model breaks and we are not heading to anything higher than lets say, 50k this year or probably next year? Alot people seems to trust this S2F model alot though

It's official: according to digitalik.net data, stock to flow multiple has never been so low:

https://talkimg.com/images/2023/05/16/blob7b925c6ac1b1f48e.png (https://stats.buybitcoinworldwide.com/sf-multiple/)


As you can see, we are at the minimum value ever of 0.46. This means that for the first time in history model price is more than twice the market price.

Is market really starting to deviate from the model?

If I'm reading the chart correctly, the answer would be no. As of today, there is a divergence between what the model predicts and the price on the downside, but in the past there was on the upside and the price returned to the median.

Another thing is whether we doubt that the model is correct or not, but as a model that explains quite reliably the behavior of the price as a function of supply, I do not think that the price today falsifies it.

As PlanB himself states, this situation, albeit new, is still within the boundaries of the functioning of the model:

https://talkimg.com/images/2023/05/16/blob75cc5eb1273c7e36.jpeg (https://twitter.com/100trillionusd/status/1407620265475989506?s=21)
https://twitter.com/100trillionusd/status/1407620265475989506?s=21

As someone in the comments recalled, the 1SD band means that 33% of the value should lay outside the darker band. So no major issue unless we  don’t cross the model line before the first months of the next year.

I did a quickie glance at the comments from the tweet too, and sure if the dark blue is 1 standard deviation and then maybe the lighter blue is 2 standard deviations, I am thinking that the commenter is probably suggesting that there can be "up to" a certain amount of going outside the 1 standard deviation bond (which he stated as 33%) in order for the model to still be valid.  It seems a bit off to be proclaiming that there has to be deviation of 33%.. that is almost ridiculous if you think about the matter.

Surely when I do a quickie eyeballing of the chart, probably we are lucky to have even up to 10% of the price points to be outside of 1 standard deviation, and actually that seems like so far the model remains solid as fuck.. In other words, the less deviation the better, but some deviation is expected "up to a point" that is far from even close to being reached.

Even if we were approaching 33% of the data outside of 1 standard deviation, that might start to cause some justifications that there may be ways to tweak the model a wee bit to make it more in line with the data rather than proclaiming that the model is actually broken.. I am not even sure what kind of tweak might be reasonable without accusations of trying to conform the data to the theory.. but whatever, punchline still seems to remain that the amount of deviation that we have experienced to date is actually surprisingly low and perhaps even a deviation level for ants.   hahahahaha

It looks like we're back on track again and the S2F model keeps marching on: July closing price @$41,490 means that the S2F bounced from the lows, like clockwork.
Also realized cap (average price at which all 18.77M BTC were last transacted) is rising again (calculated over all UTXO's). Last but not least, the few sellers at the moment sell at a profit.
More, of course, at https://twitter.com/100trillionUSD

While Stock to Flow is "suffering", Stock to Flow Cross Asset Model is still in play:

https://talkimg.com/images/2023/05/16/blobb19e90036e924994.jpeg

Bear in mind this model is inherently different from Stock to Flow: this model compares the ratio Stock to Flow ratios across several asset classes with each asset class market valuation, without taking time into consideration. Essentially, SXF takes a picture of the relative price of each Stock to Flow ratio: turns out you can buy Bitcoins, with his 56 Stock to Flow, cheaper than Gold, which has a similar S2F ratio of 60, but an order of magnitude bigger market valuation.

yesterday i watched an interview with pomp and planb
(i watched it, mainly cause according to pomp his youtube channel was shortly deleted because of the video, although this is just speculation and the two hours were a waste of time imo)

my critique would be: how can you predict the future price of something without taking demand into account? that is the second side of price. supply and demand

this is a rather stupid explanation. just because a nobel prize winner makes the same mistake doesn't prove it is the right thing to do

i more or less read everything in here, but maybe i missed something. i am also no mathematician or someone with a statistical background. i am open to change my mind. the model might be right some more years, cause i think the demand for bitcoin will rise in the future. but the demand is still an unkown in the equation and doesn't "show the future". any thoughts?

Well, I had a thought on this point and I think there is at least a couple of points to mention:

• The reference to CAPM, and in another interview to the Black&Scholes model, it is not meant to refer to their respective inventors winning the Nobel Prize, rather referring to the fact a class of models that don’t take demand in account does exist, and works, or worked, pretty well for a few decades. So, the lack of demand in the factors of the S2F model is not per se and indicator that the model is flawed
• S2F models, without taking on consideration the demand, has an explanatory power of the 95% of the variance of bit pin price. Hence, modelling demand into this, a really cumbersome task, would improve the model of only 5%, at a great complexity cost. Are you sure this is going to dramatically change the global picture? Take into account S2F has never been a trading model, only a “final state” model, providing long term predictions.

Hope this clarifies a little bit.
This is anyway my comprehension of the matter: happy to discuss if further.

i fail to see how "a model exists that doesn't take into account demand" proves that the model predicts the future, ignoring one side of the equation it wants to predict (price is nothing else than supply and demand). more generalized: how do ~10 years of data and ~3 cycles from the past predict the future? especially if we don't know the demand, which of course is impossible, because no one knows the future...

it doesn't provide longterm price prediction cause it won't hold in some years (planb himself said that)

According to this model, demand is not in the equation.
For you it is part of the equation, not for the model. For the model price is not the result of demand and supply, but ultimately only a function of S2F, or supply.


The model can be wrong for sustained amount of dollars, for sustained amount of times, but price will eventually hover around the model price in the long run, like a “dog on a leash” or “ drunk man walk”.

This is why you shouldn’t trade in this model, as it can stay wrong for bigger amounts of dollars or longer periods than you can remain solvent.

price is determined by supply and demand, isn't that a fact like 1 + 1 = 2 ? the model is wrong if it claims to predict the future price without looking at demand

sorry i don't get it: why will the price eventually hover around the model price?

The price of an option on a stock has nothing to do with supply and demand. It relies on non-arbitrage condition that determine the unique price. Not saying this model relies on non-arbitrage hypothesis, but no, price is equal to match of supply and demand is not 1+1.


Model cannot micro-estimate or precisely track the bit on. Price, but if you want it to be right, in the long run price has to recover to model price. That’s it. Not too scientific.

Ultimately, I believe that this aspect is correct that price is a product of supply and demand.. so they do somehow both need to be accounted for, even if there might not be a need to talk about both - even while presuming both to be within what is determining the price... so I doubt that you can presume S2F to be wrong merely because it does not specifically talk about demand but merely presumes demand in some kind of way... and just focuses on supply.


I have proclaimed on many occasions that the S2F model either presumes demand as a kind of constant or presumes that demand is just going to go up with whatever the conditions and pressures of the market that are contained in looking at supply pressures.  Maybe my way of conceptualizing and phrasing is not correct either?... and personally, I have also considered the S2F model to be a valid way of attempting to give odds to what is likely to happen in bitcoin in terms of ongoing price dynamics - even if actual facts might end up causing the curve of the S2F model to have to end up getting shifted down or up based on what ends up actually happening (or as the data flows in)...

How do you account for demand in the future anyhow beyond just attempting to treat it as some variation of a constant?  I bet that the S2F ends up beating the pants off of any model that attempts to account for demand in any kind of way that takes much of anything away from the supply emphasis aspect that is already contained in the model....

Another vague concept that seems to attempt to explain demand and underly what is pushing underlies bitcoin price dynamics is the exponential s-curve adoption based on Metcalfe principles and networking effects.. which surely those kinds of ideas account for a kind of ongoing onward trajectory of demand that is going up with ongoing adoption and the ideas do not seem incompatible with S2F in terms of being able to use (or even presume) such ideas to consider what is happening with demand as an ongoing upwardly trajectory in a way that complements s2F's attempts to tell us where we are likely going based on where we have been and where we are at.  

PlanB tweeted the other day an interesting consideration on the Stock To Flow Cross Assets:

https://talkimg.com/images/2023/05/15/blob1be8cfde5e60dcdd.png
https://twitter.com/100trillionUSD/status/1453006360568811531?s=20

This is almost identical to a previous tweet, but it focuses on the relative performance of the two competing Store of Values.
As you can see, gold valuation barely moved during the last 10 years. Each year Valuation,, and SF is represented by single purple dots: those are almost impossible to distinguish from each other, meaning that gold has been steady in nominal terms during the last 10 years.

BTC, on the other hand, has been constantly catching up, crawling upward on the SF/Market Capitalisation regression line.


EDIT: relevant Meme:

Another great interview of PlanB with Preysto Pyhs:

BTC048: Does the Stock to Flow Model Eventually Break w/ Plan B (https://www.youtube.com/watch?v=FbfnNASspyU&t=17s)

https://talkimg.com/images/2023/05/15/blobbb98b3ebe2bac003.png




It's a great conversation. I strongly suggest you to listen to in in the full length.
Two points stands out:





Going a little bit oustidethe bitcoin only scenario:

As they say, past return do not guarantee future returns. I like to extend this say to forecasting models, "predictions in the past do not guarantee predictions in the future". I have to admit that anyway, due to the unpredictability of bitcoin demand, this model does reasonably well. If I had to use something or would really care about the price in the mid-term, I would be my choice as of now. The fact remains that bitcoin is expected, by most people, to grow at a slower pace than in the past, but I am betting on an exceptional long term growth to which this model seems to agree.

This model was fitted only on a subset of the then available data, and had a forecasting power on following data, with minimal parameters adjustments.
This means the price dynamic is quite well predicted by model, so, in a sense, predictions in the past actually predicted the future!".

The point with gold would be the price is never supposed to change, it indicates an alteration in the underlying currencies if pricing is continually changing.  Of course for certain the plan is being implemented such that dollar is devalued; we expect every price of a performing asset to go up in such a long time.   However in defense I'd say gold is not a performing asset, no dividend, no returns no company investment just some metal so its just a liquid commodity used as currency over centuries and now its mostly the reference not performance itself.  There is also the longer time line, though a decade should be enough to draw a conclusion if any asset can say its long term and with minimal velocity it would be gold, some holdings have not moved since before ww2 for example.
  Lastly I'd say inflation invalidates all prices in terms of value, its how society becomes poorer as savings will not have maintained vs inflation, nor wages and so on.   Asset speculation, debt trading by bankers, they did well etc.

Hopefully you are not buying gold as a way to preserve your wealth.. even though sure there is quite a bit of industrial value in a variety of PMs, including gold, but they are likely going to use their currency value to bitcoin since bitcoin is at least 100x better than gold in terms of monetary properties and might even be in the ballpark of 1,000x or more better than gold.

There are a few other assets that are being used as inefficient storage of value also such as properties and equities, and they are likely going to be losing their value to bitcoin too.. at least the storage of value aspects.

Not everyone understands what is happening in terms of our greatest wealth transfer in history that is going to continue to cause the S2F model to be correct in terms of the ongoing UPpity aspect that it is showing that might not exactly account for exactly how demand is going to continue exponentially in terms of the various network effects that continue to build with ongoing adoption and the realization of people that bitcoin is the superior asset - both in terms of storage of value and also it has the advantage of the ongoing exponential adoption.,, that causes unfairnesses in trying to compare it to more mature asset classes whether we are referring to PMs or properties, or equities or some other asset classes.

There have been a lot of discussion lately about the Stock to Flow being invalidated by low market price.
In his last Podcast Stephan Livera discussed this with PlanB.
As usual, really interesting discussion emerged.

https://talkimg.com/images/2023/05/15/blobd7960a3ca662bff3.png (https://twitter.com/stephanlivera/status/1465346237163610114?s=20)
https://twitter.com/stephanlivera/status/1465346237163610114

Heck yeah.

I just Translated this Topic for my Local People. I was learning about the Stock to flow Model. I don't know how many times I read this thread. I learned a lot about the Stock to flow Model just to Translate this thread. It took me about two weeks. During these two weeks, I read this thread may be more than 20 times and I was translating a bit. I learned many things about Bitcoin from this one. I never knew that Plan B Expected We could hit 100 Trillion between 2024 and 2028. BTW, That was an awesome experience. I was not able to write a full thread in One post so I had to post twice. I don't know why? Maybe there is a Word limit or something like this. Anyways, Great Job @fillippone. Thank you very much. I would like to request you to add my post link on the OP and check out my post too :)

স্টক-টু-ফ্লো মডেল: অভাবের সাথে বিটকয়েনের মূল্য মডেলিং (https://bitcointalk.org/index.php?topic=631891.msg58684280#msg58684280)

It is probably as good as it gets, but again, it is very easy to adjust a model backtesting, that is, adjusting the parameters so that it works perfectly in "predicting the past". But the nature of the market in the long and short term is highly psychological and bitcoin is facing legal and geostrategic issues that was not facing before. 200 year before it happened, people would not have predicted the fall of the Roman Empire to put it in a way.

There has been a lot of debate around Stock to Flow recently, as the market started moving on another level, with model flirting with the 2 standard deviation error  interval of confidence.

This of course raised a lot of irony, enquires and skepticism about The model itself.

Today I found this Twitter thread, discussing some PlanB criticism, and I’d like to share here:

Original Tweet

https://i.ibb.co/Jj8sFDK/59091290.jpg (https://twitter.com/100trillionusd/status/1486704422948425729?s=21)



Twitter thread unrolled  (https://threadreaderapp.com/thread/1486686429451325444.html)


Quoted article:
WHY THE BITCOIN STOCK-TO-FLOW MODEL IS NOT USEFUL (https://bitcoinmagazine.com/markets/why-bitcoin-stock-to-flow-is-not-useful)

Is one of the most accurate models and clearly the one that gives more incentives to the future investors. However good, the accuracy is always limited and there may be factors on institutional investors that may limit the future validity of the model and the need to re-tune a little bit to get a proper long term measure. It is in any case a difficult exercise and, perhaps, if the model becomes too accurate the profits may not be there.

I'd say WAS one of the most accurate models, until the last few months happened. For instance in 2020 when bitcoin crashed to 30k the model variance was only 0.3, but last summer it was 0.9, like in the lows of the 2018 bear market.
I wouldn't count it out though. There's a chance we're in 2013 again with last year being only the first phase of the bull market, in which case S2F is on track. We'll know in a year.

This topic is very helpful to me. I open all the attached documents and read them well. This topic has answered by question. Though people answered it before, but I got much clarification here. My question -
PlanB explanation below and the more link, gave me an extended answer.
Again, saying about the fixed supply of bitcoin at 21million. I am predicting that there will be a major hard fork after 2140. It is all about consensus, there will be glaring need for it. So many miners who accumulated huge amount of btc from early mining will always say no to any hardfork, but in years coming, when they must have spend their btc, they will agree to change the protocol and create more bitcoin.

Again, it was said in the article that Ripple and other altcoins that doesn't use PoW do not have security. If actually they do not have security, why are they existing till now, there should have been major hack or the network cheated to death.

So, for S2F model. It was stated that it is not a law, it is just like a model which is a semi hypothesis. There will be deviation at a point and there will be modifications. But S2F has helped many become successful in bitcoin.

Strange how this model continues to hold traction in spite of 6+ months far away from the predicted value.

Since PlanB resiled from his “S2F will be invalidated in December” statement what is the current expectation about where he will go next?

PlanB had a few difficult week trying to explain why the fail fo the year (BTC not getting to 100k).
Firstly he stated that the price was within the 2 standard deviation, then he stated that the important thing is having 100K on averGe during the cycle. This meaning the longer we stay below 100k, the longer we have to stay above to reinstate the average.
We will see, as usual, interesting times ahead.

Do you know how PlanB is calculating the standard deviation for future values?  I can’t quite work out how he can say what the standard deviation will be for the predicted future value, it appears to be a static value and not changing according to the actual observed values.

In any event, as calculated the two SD range is rather large, so not entirely surprising that the price is still within it!

Many here won't like my post, but: My opinion on Stock-to-Flow is, and has always been, .... devastating. I consider it pseudoscience (sorry PlanB).

It wasn't just invalidated in 2021, it was invalidated years ago because when you apply it to altcoins with fixed supply or lower "inflation rates" compared to Bitcoin it should lead to an even sharper price increase charts, which didn't happen.

The explanation is simple: Stock-to-Flow doesn't absolutely take demand into account. Demand is crucial for the value of all existing assets. We can have some super-scarce assets - if nobody likes it, its value will be zero.

Stock-to-flow may have even harmed the Bitcoin community, because of the unrealistic expectations it generated. Perhaps the price decline we're seeing since December was generated at least partially by sellers who now feel "betrayed" because the model didn't hold.

Let's bury Stock-to-Flow pacifically and get over it. Bitcoin doesn't need this. It can grow organically without permabullish "mathematical" assumptions with questionable validity.

Instead, we should focus on better fundamental analysis, e.g. taking into account evolution of addresses/transactions/LN (Quantity Theory of Value), option prices, exchange users (like Crypto.com's periodical analysis documents), stock prices of Bitcoin companies, mining difficulty evolution, etc. These numbers give indications about demand, in different ways. Supply indicators can be part of such a model, but a working model must always take both aspects (supply and demand) into account.

I don't completely disagree with you, at least in terms of your wanting to assert that there are some factors/indicators that might well not be captured by the Stock-to-Flow model, but you seem to be filled with a lot of disgruntledness in terms of maybe specific expectations that have been assigned to the stock to flow model by people who follow the model and perhaps even by PlanB himself in terms of PlanB likely talking up the model too much and also there seems to have been quite a bit of mix up between stock to flow and PlanB's additional discussion of a floor model that he created that really got into specifics that ended up being way the hell wrong .. so it seems really hard to give any credit to PlanB when he was putting out so much specifics with the floor model.. $98k in November and $135k in December.


That's bullshit d5000.  The fact that stock to flow to a bunch of shitcoins means that it is not valid when applied to bitcoin.

Fuck shitcoins.  I do not even want to get into any discussion regard the variety of phoney baloney in various shitcoins and that you want to consider them as somehow valid assets that are even close to bitcoin - even though there are quite a few shitcoins that have been riding on bitcoin's coattails in a variety of ways.. some more successful than others and some coming up with their own unique ways to scam people out of value through ponzi schemes and various other kinds of innovative and money printing scamming mechanisms.

If you know some of the story behind PlanB's attempt to look at bitcoin through a stocktoflow model, it had already been applied with various other kinds of assets with varying degrees of success - so surely it should not be considered as any kind of model that will fit very well with all assets, but surely does seem to fit with bitcoin quite well.. even though maybe there could be some fair questions whether PlanB has done it correctly in bitcoin including how he trajectories out based on historical data that surely is going to vary to some degree in terms of whether any kind of exact mathematical formula is going to fit to trajectory out the numbers in to the future.


Of course, demand is a factor.. and whether stock to flow is presuming ongoing demand (so treating it as a constant) or just assuming that it is going to continue at some kind of level that it need NOT need to be accounted for.. because it is likely to just continue to go up along with the growth of bitcoin's adoption...

The lack of accounting for demand hardly seems to be as big of a flaw as you are making it out to be, and I suppose that one of the reasons that I have liked to emphasize that stock to flow should be looked at along side the four-year fractal (which surely is somewhat redundant) and also considering exponential s-curve adoption based on network effects and metcalfe principles - is probably my concern (as well) that demand is not sufficiently accounted for in the stock to flow model.. and considering the varying network effects (even the 7 that were outlined by Trace Mayer (https://nakamotoinstitute.org/mempool/the-seven-network-effects-of-bitcoin/)) would be helpful supplements to the stock to flow model.


harmed the bitcoin community... that seems to be bullshit too.

yeah... there may have been people who were overly assigning value to BTC prices to be at least above $98k in November and above $135k in December.. so they got reckt as fuck because they were gambling..

Good.

Purge the gamblers.

 


you can bury stock to flow to your peril...

Good luck with that.. you are going to need it.

Stock to flow remains one of the best BTC price models that currently exist in bitcoin (if not the best?). even if it is currently 2 standard deviations below the means of expectations.


Of course bitcoin does not need the model.. bitcoin is going to do what bitcoin is going to do... and surely bitcoin was already following such a model before planb formulated the matter.. and the stock to flow model still seems to help some folks to think through what bitcoin is.. and also to consider various aspects of BTC's price dynamics.  Very helpful.. but surely not needed.. and there are other ways to think about the matter and to come to similar conclusions.. even though the stock to flow matter remains the best, currently.. and if you want to handicap yourself and others by not using it and persuading such other dweebs  (who fail/refuse to account for valid models) not to use it, then that is your choice.  You are all going to need luck.. both you and any dweebs that you convince that the model provides no value (provides the opposite of value, right?  ahahahahaha)
 


There's some helpful frameworks that fall into mathematical parameters.. whether you appreciate them or not or whether you believe that they help to inform you better or not.  Your choice, for sure.


Nothing wrong with taking into account a variety of other factors.. and some of those various other factors might well mislead you into nonsense.. so you can choose how much weight to give to various factors/indicators and you can also choose how much weight to give to stock to flow... whether that is low to none or a considerable amount of weight is going to vary from person to person.. and surely some people are going to end up being more correct than others in terms of how they are assessing various factors/indicators and how much weight they are assigning.

By the way, even fillippone mentioned above that the stock to flow expectation  for Bitcoin's mean price for the whole of the 4-year period following the halvening is $100k.. so we are a couple of months short of the half way point, and some folks want to completely write off the model?    Shouldn't we get further along in the whole assessment period before arguing both the model has little to no value and that the model is invalid.... blah blah blah.   

Surely, it may well end up being the case that we get through the whole four-year period, and the stock to flow model (in its current iteration) underperforms the whole four-year period, so in that regard instead of an average of $100k for the whole period, there is some other lower average number - such as $90k?  $80k?  $60k?  $40k?  how much the average ends up being off (to the extent that it does end up being off) might well help to inform those of us who are taking such model somewhat seriously as a serious contender in the way we think about BTC price dynamics whether the model might be invalid or whether the model might need some kinds of tweakenings, no?

The stock to flow model I think depended on assumptions in terms of demand consideration. It could not have assume that demand is constant. The demand and supply has so much influence on any market that is to be traded. Some models uses the artificial demand that will be created by the assumptions of the model to predict. Hardly there is any model that works 100 percent on all models. Stock to flow model is not perfect but it has giving good idea on how to follow bitcoin market. Bitcoin is still in the early stage and it is still changing, so it can be proving some models wrong with time.

Not at all. I'm worried by the damage the model could do to Bitcoin (more below).

I agree with you that several altcoins are completely different assets than Bitcoin, because of their centralized and sometimes scammy nature. But that doesn't apply to all of them. There are more than hundred altcoins which technically are similar to Bitcoin (no premine, no centralized group in charge etc.).

Even with a superificial view at their price evolution it becomes clear rapidly that they are far away from the predictions by the stock-to-flow-model. Take Litecoin or Monero as examples, which both reached a new ATH in 2021, but their price level is similar to four years ago. Both have no excessive inflation rate so the curve should look similar to Bitcoin's.

If stock-to-flow is only valid for Bitcoin, gold and some other metals, but can't be applied to other assets of similar nature, what makes the "match" of their stock-to-flow curve in some timeframes more than a coincidence? A theory should be valid for all assets of a given category.

The only valid argument would be that many altcoins don't have really a "mature" market, but just for LTC and XMR this isn't the case. They are actively traded at hundreds of marketplaces. So their price evolution should be valid to contrast the stock-to-flow hypothesis with.

In my opinion, network effect is probably the main driver of Bitcoin's price appreciation. Thus, I think a detailed analysis of this phenomenon, when applied specifically to Bitcoin, would give more insight than any purely supply-based model like stock-to-flow.

I would even argue that we can leave supply entirely out as 90% of all Bitcoins were already mined. The effect of halvings on supply inflation is lower in every iteration.


More as about these short-term gamblers I'm worried about two things:

1) longer-term price evolution - stock to flow promises basically a continuation of the steep price increase of the last years. Even if in 2022 or 2023 we see again a strong bull market which gets the price again "in line" with the model, the expectations for 2025 (next post-halving) already are extremely high (500-750K). While it's not completely impossible I doubt this price will be reached in this decade. So roughly in 3-4 years likely there will be many disappointed investors.

2) the focus on the supply side/scarcity as "reason to invest in Bitcoin" gives credit to those critics who view Bitcoin as a "ponzi" or "greater fool game" where everything depends on finding new buyers for an asset whose main virtue is "scarcity". Bitcoin's scarcity is definitively one of the main reasons why it works. But it should never be the only or main reason to invest in it.

A combination of both factors could led to a worst-case scenario for Bitcoin: Disappointed investors change massively to the "ponzi critics" group. They get louder and louder in the media, Bitcoin's price plunges, and a general public opinion consent is forming that Bitcoin really is dubious and based on ponzi-like characteristics. Sharp regulation in many countries is likely to follow. While this will probably not mean the "death" of Bitcoin, it would be a major setback, back to 2015 or so.

To clarify: I am not endorsing the "ponzi" criticism at all. I'm convinced of Bitcoin's genuine strengths (difficult to censor, decentralized, global, etc.). However, I would like the focus for investors to change to demand-side characteristics: use by merchants/consumers, Lightning Network growth, and so on, as the reasons to invest in Bitcoin. Because if we can prove that Bitcoin doesn't depend on a price increase but is really used massively, then this would lead eventually to the definitive rebuttal of the "ponzi criticism", which would be a major achievement for Bitcoin in public opinion, I think.

Let's talk again in 2025 :)

I've wrote several times in this forum, already months (even years, I think) ago, that I disapprove of the stock-to-flow model, even when it still seemed perfectly valid. I admit that was mostly in the local sections, because I'm not so fluent in English than in Spanish and German and thus are more active in these sections. Many people disagreed with me and that's completely ok.

But it's not that I got "only now" against this model "because it no longer works". I think if a model was wrongly conceived from the start, then it should not be used, even if it seems to work for some time. Just there's where the danger lies: we could get confident that it works, but when we most need it (e.g. in the next bear market, when for Bitcoin it would be advantageous to find new investors) it fails completely. See above in the "harm" section.

It should not be tweaked infinitely, though. For some time one can adjust magic constants a bit and add new formula elements to make it work again. But until demand isn't taken into account, its main flaw continues to be present. Did PlanB try to get a peer-review by a serious economist?

By the way, even if we disagree in most aspects (with the rest of your post, I partially can agree, or at least agree to disagree), thanks for taking the time to answer in detail :)

I guess I will read more details about your ideas regarding how the S2F model damages bitcoin below, yet I am having trouble appreciating how a model could really cause damage in any kind of substantial and meaningful damage... unless you are suggesting that it is so convincing that people are going to place more weight upon such projections within such model than it deserves.. and even that.. it is not like the substantive terms of such model is lying to the people... the model is somewhat passive in that sense in terms of presenting guidelines for what could happen.. if people are such idiots as to read too much into such a presentation information.. I don't see how the model would be causing their dumbness and gullibilities... .. I mean a model could use misleading facts or misleading logic, no?..  but we do not have that going on here.. so your overall presentation of the model as damaging seems to misplace how a model should be considered amongst other information for individuals to come to their own determinations, including how much weight to give to such a model.. including that some folks will overweigh the predictability aspects and other people will underweigh the predictive aspects of such model.

It comes off as somewhat patronizing to suggest that the model is flawed because it is too convincing, if that's what you are suggesting.. but hey.. I will read more about your details in regards to the supposed damage to the extent that you might flesh this out a bit more below or to the extent that you might be saying something other than what you have already said.



I still think that you need to be careful with those kinds of granular comparisons of unequal assets that likely do not matter very much in the end.

Yeah.. I don't like when people proclaim that bitcoin is only in the lead because it was first, but there is something to being first in terms of considering how various networking effects evolve, and when we are dealing with something such as money or storage of value, there is likely a bit of natural gravitation towards one standard.. especially if the standard has superior qualities in terms of Gresham's law considerations.

In other words, you may potentially have already heard about the idea that if you want to replace an incumbent you better be something like 10x better than the incumbent, otherwise you do not have any kind of meaningful chance.. beyond potentially temporarily (perhaps 50 years or more?) deceiving others into believing that you have some kind of a chance... in other words, value is going to continue to gravitate into the incumbent, absent if you are able to achieve something like a 10x or more improvement upon the incumbent so that it becomes worthwhile to strive to replace the incumbent rather than the more logical route of improving upon the incumbent.. to the extent that the incumbent might have some capacities to improve.

you are getting into comparing various similar coins, and let's even give the benefit of the doubt that some of them might be several times better than bitcoin, but it still ends up being a BIG SO FUCKING WHAT because they are not even close to 10x better than bitcoin.

I understand that you might be tempted to engage in such comparison because you will proclaim that NOT very much time has passed, and it has ONLY been 13 years, so how could bitcoin gain such an incumbency status? and seems to me that you are failing and refusing to account for the fact that Bitcoin is not just Bitcoin, but there is a lot of building that is going on around bitcoin and there are not really any major flaws in bitcoin, so ancillary actors continue to build upon bitcoin rather than taking chances with some other thing that happens to NOT be 10x better.. they are not going to take chances on such products that are not clearly superior to bitcoin.. even though those various shitcoins get all kinds of hype, they do not convince smart money/people to defect over to them... the smart money and smart people remain in bitcoin...

It is like the analogy that Trace Mayer used to use about the professional football team compared with the junior varsity.. the junior varsity does not have a chance.. they will get crushed.. and continue to get crushed even if they engage in all kinds of marketing.. there is not enough there there in order to actually allow them to compete in any kind of substantive and meaningful way.


Why are we wasting our time with such nonsense comparisons?  There is no reason to believe that Litecoin or Monero should look similar.. the dynamics are different if you are not the leader of the sector...

Bitcoin is the leader of the sector the last I checked.. and there is nothing even close to it.


Over my pay grade as voluntary pundit to study into this.... even though it seems to me that you are going on a tangent and getting into the weeds of questions that do not really get to helping anyone with how much weight that they might want to place upon stock to flow as it is applied to bitcoin.. I have asserted that it is amongst the best of our current models so long as coupled with four year fractal and exponential s-curve adoption based on network effects and Metcalfe principles... so I consider stock to flow to be ONLY part of the consideration - even while it seems that it is the best of the frameworks that we have going.. even if we might have to shift the expectations down on their curve a wee bit..



I think that the answer is that they are not the industry leader, so their lunch is going to get eaten by bitcoin.. but that is kind of a mere speculation on my behalf... and I still doubt that there is any reason to get worked up regarding stock to flow not working with them.. but hey.. you do you.


Seems to me that stock to flow helps to ground the theories about networking effects within a parameter that is tailorized to bitcoin.. otherwise you just arrive at amorphous nothingness of pure vague "number goes up" theories without any meat on the bones... stock to flow puts some meat on the bones and provides a kind of framework to consider number goes up ideas.. yeah, it might not be right in its magnitude predictions.. but it gives you some ballpark ideas that are better than merely looking at the vague concepts of 7 different network effects....

In other words, we have to account for BTC's scarcity and how that concretely pushes bitcoin waves (mania periods?).. and S2F seems a good tool for considering that angle of bitcoin.


I can see that on a theoretical level, you can consider bitcoin in that direction, but still is not going to get you out of actual bitcoin price dynamics that have a supply curve that has a pretty strong framing effect on bitcoin - even if you strive to ignore it... and come up with other theories that seem to be generally applicable and not really tethered to bitcoins actual dynamics.

By the way, I have always been a bit bothered by the idea that mining causes the bitcoin's to come into existence because they get issued.. but we already know that they are already there.. so for sure, there are ways to calculate that they are already there.. and even get into efficient market hypothesis frameworks to attempt to price in the halvenings and the concrete physical dynamics that even though we know for sure that various coins are going to be issued at specific times, there still seems to exist actual physical and material effects that are not exactly knowable before the halvenings occur, and the actual various behaviors of folks trying to get coins that have been reduced in their issuance quantity that can take several months (or even a year or so) to play out to see how the halvening of the new issuance has caused increased constraints on the coins available and actors within the space adjust their behaviors to figure out the extent that they want coins from the existing supply, the new supply and in the end it might not really matter so much from where the coins are coming, but all the persons involved in the space come to realize that the price is going up because the new issuance is not enough to keep up even considering the existing supply that can get thrown back on the market too (with increases in prices).  Ignore, denigrate and poo poo these supply constraints to your peril...

Supply constraints have been an ongoing dynamic in bitcoinlandia, continue to be an ongoing dynamic and will likely continue to be an ongoing dynamic that continues to push bitcoin into cycles rather than merely vague and amorphous "roll your own" detached NGU baloney.


First of all.. S2F does not promise shit.. you are reading into it, if you believe it to be promising something..  but it does provide some probability frameworks in which you are likely to consider that some scenarios end up being more probable than others, so if you read those as promises, you are failing/refusing to appreciate that (especially in the short-term) minority scenarios can both play out and play out way longer than anyone believes to be reasonable or possible... so surely there are folks who are ready, willing and able to engage in behaviors to cause minority scenarios to play out, and they can do it for a very long time (relatively speaking), but does not mean that they will be successful in terms of breaking the reversion to the mean (even if they are trying to accomplish such.. and even though they might cause the model to have to become tweaked - such as shifting down the curve).


The predicted numbers do not seem unreasonable to me, so long as you do not either consider them as guaranteed and also continue to prepare yourself for both UP and DOWN... including appreciating that the asymmetric bet nature of bitcoin includes the idea that you do not need to stock away a whole hell of a lot of value to prepare for UP.. in order to take advantage of UP.. in case it happens - even if you consider such UP as a minority scenario.

I have seen this over and over in bitcoin, in which people fail refuse to adequately prepare for UP.... and surely having a lot of doubts about UP might justify taking a smaller position in regards to UP, but it does not justify NOT preparing for UP or being overly whimpy in terms of your UP preparations or fucking around with trading and trying to time the market and all that kind of bullshit.

On a personal level, newbies should just be figuring out what level of exposure that they want to get, invest for the longer term such as 4-10 years or longer and figure out how much to allocate to bitcoin.. These days investing 1% to 25% of your quasi-investment portfolio into bitcoin would be reasonable for any newbie, and to continue to study the space while getting to your initial investment allocation....

When I got started in bitcoin in late 2013, it took me about a year to get to my own investment allocation - which was 10% (even though I did not know that was going to be my target when I started), and my second year in bitcoin, I largely ended up overallocating into bitcoin and getting up to about 13.5%-ish... Seems to me that these days bitcoin's investment thesis is stronger, and instead of having 1-10% as the recommended initial newbie target, it is more than reasaonble to recommend such a 1% to 25% range, and surely the person is both responsible for choosing their own allocation and also responsible to attempt to learn and adjust strategies along the way... including one of the most basic things that any newbie should do is to assess his/her own particular circumstances including but not limited to cashflow, other investments, view of bitcoin as compared to other possible investments, timeline, risk tolerance and time, skills and abilities to learn, strategize and tweak along the way which may well include reallocating from time to time, trading and the use of financial instruments such as debt and other financial instruments such as margin and options... and surely I don't recommend getting to the more advanced stuff until working out the basics and sticking with more basic plans to make sure to have a solid set of strategies in the basics before using more advanced tools.. and for sure accumulation of BTC basics include dollar cost averaging,  buying on dips and lump sum investing... which I consider DCA to be the most powerful starter technique while attempting to figure out what else to do.. but getting started and getting the fuck off of zero..,. or these other failure/refusal to prepare for up scenarios that you seem to be cautioning d5000.  


Well.. maybe as a newbie bitcoin investor, many folks might not understand the differences between legitimate investments, so I would not expect them to figure it out right away.. and to be fooled into the wrong frameworks, so likely any newbie should be attempting to spend some time to study about bitcoin and also to study about their own finances.. and maybe that is part of the rationale why starting with DCA is amongst the smartest ways to get started in bitcoin.. and also to attempt to study along the way.  For sure, also once a person takes some steps to set up DCA and even to get some kind of a meaningful/substantial stake in bitcoin, then they are going to be in a position that some of the aspects of bitcoin will become more clear to them with the passage of time.. and yeah, if a person is very skeptical about bitcoin, maybe s/he is going to start out with putting just $10 per week into bitcoin, but as they become more familiar they may well be able to achieve something more aggressive, such as $100 per week.. and for sure, any person getting started in bitcoin should be taking steps to assess his/her own situation and to tailor his/her own bitcoin investment to such personal considerations and to reassess along the way.. which surely also might include getting out of bitcoin in the event that there are conclusions that bitcoin is not serving them in ways that they initially thought to be possible... so surely part of the justification of investing small amounts (such as $10 per week) while learning is that none of us should be over-investing into something in which we are not comfortable both financially and psychologically... and for sure, if any of us establishes at least a 4-10 year investment timeline, then we should not be expecting to cash out of any of our bitcoin during that time, so we also have to make sure that we have our cashflow situation under control so that we are not going to need any of the money that we put into bitcoin during that investment timeline.. and surely it is not easy for anyone to get their shit together and to get their finances in order while beginning an investment in bitcoin, another reason to start out small and to maintain something that you know that you can stick with.. while assessing and reassessing and maybe after a few years of being in bitcoin, there will be greater levels of learning that allow such a person to justify becoming more aggressive in his/her bitcoin investing.. perhaps? perhaps?



Seems like a BIG SO WHAT? to me.  People have to take responsibility for themselves, and whatever the market is going to do whatever it is going to do... and hopefully, you are not getting so worked up about such nonsense that you are failing/refusing to prepare your own self in terms of your bitcoin.. and again, frequently there is a considerable pattern of people getting worked up about various nonsense which causes them to inadequately prepare for UP.. so you do what you want if you are getting wrapped up into such nonsense and believe that bitcoin's price dynamics are going to be influenced in the ways that you believe and go in the direction that you believe to be potential .. while ignoring the S2F model elephant in the room - and other more relevant theories including four year fractal and exponential s-curve adoption based on Metcalfe principles and network effects.


Seems to me that you are lacking quite a bit in your framework of what is bitcoin and how bitcoin is an actual paradigm shifting technology that has been purposefully designed with incentives of supply constraints that make it the soundest money ever made - and which is very powerful in our internet/digital age, and you are failing/refusing to really account for the supply angle that has been influencing bitcoin's price dynamics and likely to continue to influence bitcoin's price dynamics, but hey you can do what you want in terms of the frameworks that you would like to believe and what ways you wish to propagate your ideas about bitcoin's dynamics that seem out of touch with reality to me.... and I am not asserting that your framework is irrelevant, just like the shadows in the cave are not irrelevant.. but they are not as directly relevant to appreciating the actual thing that we have in front of us - aka bitcoin.


We don't need to do shit.

Bitcoin speaks for itself, and if people want to get distracted by nonsense.. let them remain distracted... for sure some of these periods of suppression of bitcoin prices allows for more accumulation of BTC at lower prices, so hopefully, you are focusing on yourself rather than trying to save dumb-fucks from focusing on the wrong frameworks. By the way, I am no kind of elitist who is out of touch from reality, but to some extent, you gotta let people figure these things out for themselves, and I doubt that it is helpful to proclaim that S2F is not helpful to understand bitcoin so long as it is coupled by other dominant frameworks of four-year fractal and exponential s-curve adoption based on Metcalfe principles and network effects.  Yeah, there are other things going on, including manipulation and various other factors/indicators that you list, but it seems to me that you are getting overly distracted when you are trying to fight with what is actually going on, including better understanding how S2F fits into this matter, even if you seem inclined to give it less weight than me... but it seems to me that if you are spending so much time fighting it you are likely providing a disservice to yourself and to others, even if you genuinely believe that you have better ways of framing the matter.. and yeah maybe you can argue your nonsense for 4-10 years into the future, when you should have been focusing on ways to at least incorporate S2F into your framework.. but again, do what you like... that's your choice, and there are a lot of folks who are all worked up in their negging on S2F..and if you want to get caught up in such premature delusion.. then that's your choice.


We do not have to wait that long.   I think that people better make sure that they are thinking about bitcoin and acting now, rather than propounding some kinds of nonsense amorphous frameworks that they believe to be better blah blah blah.

Hopefully, you are acting based on information that you have in front of you right now in terms of adequately allocating into bitcoin, and preparing for a variety of scenarios rather than wanting to be right in 3-4 years.. about something that has a variety of paths and none of us should be fucking around with just one framework.. or whatever it is that you are trying to proclaim yourself to be correct about.

Are you wanting to give close to zero weight to S2F?  (maybe 20% or less weight to S2F?)  is that what you are trying to achieve?  After all of this back and forth with you, I still don't know what grounds you in your supposed "better way of thinking" about bitcoin price dynamics/social dynamics.  Are you really saying anything except that you wish that S2F were to have less weight than it does in the minds of folks considering BTC price dynamics. You might even be misappropriating how much weight that you believe others are giving to S2F in order to make your arguments regarding S2F being dead or insufficient in a variety of regards...  blah blah blah.


Ok... so you want to say that you hated S2F before it was even fashionable to do so.. great.


They probably disagreed with you because you were likely trying to give S2F way less weight than it deserves... Maybe you are trying to suggest that S2F should be less than 10%, but others are in the 40% to 50% or even more arena, but you are also trying to attribute arguments to them that they are in the 80% to 100%, which is also not true.

I would suggest that you reassess some aspects of your wanting to be right rather than trying to be a bit more reasonable in terms of what you might be saying regarding how much weight you are suggesting to be given to S2F... Maybe if you consider that question, you might, at least, find some value in S2F in order to attempt to make some of your arguments more reasonable and more fact based..?  I don't really have too many issues with a lot of what you are saying, except that you seem so damned inclined to negate and denigrate S2F that you seem to be skewing your own presentation of various matters... Maybe I am wrong, but seems that you should be able to frame your arguments better.... but I am also considering if you really do attempt to more fairly frame your arguments, you will likely realize that some of the ways that you are already presenting the matter are not as strong as you are trying to make them out to be merely because you are seeming to want to be right rather than to really think through some of the matters in more reasonable ways.


Seems premature to me to be saying that the model is wrong.  Think about it.  The model suggests a $100k average BTC price for the whole of the halvening period, and we are slightly less than half way through the halvening period.  Yeah sure, maybe you could say that the model is too ambitious and maybe only $60k or $80k will come to average out for this particular halvening period?  We also had PlanB spouting out absolutes and floor models, which are different concepts, even though he was basing some of his assertions on his interpretation of the S2F model.. which that portion of his interpretation was shown to be wrong, especially how he framed it.. namely $98k by November and $135k by December....






I don't believe it has failed.  If you have an expected line, the spot price can deviate greatly from expected mean line... under it or over it.. so yeah, currently we are quite greatly under it.. but still.. seems like a BIG SO WHAT?  and likely too soon to be saying that the model is not helpful.... or that it is invalidated or broken or whatever it is that you are saying.



I don't see why not.




Your level of expectations for the model seems to rise to the level of ludicrous... A lot of people have commented on the model at various points in time.. so if you choose to completely discount it or completely worship it, that's on you... .  It's still amongst the best of the models...from my perspective.. even if it is currently quite a bit underperforming prior expectations.



Of course, we do not disagree about everything.. that's for sure.

I'll limit my answer to the main topics:


1) Using altcoins to check S2F validity: OK, so you're suggesting that Stock-to-Flow only is valid for "industry leaders" (i.e. Bitcoin in the crypto space). In my opinion, this makes the model very specific; you wrote it's "tailored for Bitcoin". We lose then an opportunity to be able to contrast data with more sources to improve the model. (I will not discuss about maximalism/non-maximalism here, because that's a bit off topic.)


2) S2F and "network effect": If I am not wrong, the current S2F formula is the following:

exp(−1,84) * (current supply/block rewards in the last year)

This means that the indicator does only take supply into account, and adds a "magical constant", to make it fit with the price curve.

If we assume that the price of every asset in the world is driven by the relation between supply and demand, this would mean that S2F is basically assuming that we have a constant demand, because the price is completely explained by the supply variation. But I heavily doubt that we have constant demand in Bitcoin. In bear markets, trading volume typically drops, transaction volume often too, and the sinking price itself is obviously also an indicator of shrinking demand. These variations are not part of S2F.

So what S2F is basically assuming is that "Bitcoin's cycles are only explained by supply variations". I think this is wrong, as you can imagine :)

But if I considered S2F at least a little bit useful as a single indicator of a bigger model - and I would not categorically rule that out! - then I would add a demand indicator to it. A simple "adoption curve" like the S-curve you mention, in my opinion, would be too simple. It doesn't take into account a whole lot of factors which could favour (or not) faster adoption in certain regions and/or worldwide, e.g. regulation, evolution of public opinion, trends, but also technical achievements which lead to new use cases (example: Lightning Network) etc.

The problem is of course that demand is difficult to quantify; but one could build on models like the user estimation which is published regularly by crypto.com (an estimation based on exchange user accounts) and combine it with, for example, the Lightning Network growth and transaction volume.


3) The "harm of the model" discussion: You are of course right that people need to learn themselves and take responsibility for their investment decisions. But how can they learn to take better decisions? Reading different sources and opinions. So to take a decision if taking S2F into account or not, they should read PlanBs arguments and those of his critics. PlanB is pretty bold about his model, it seems, so his critics also have to be bold to be heard, and sometimes a bit harsh.

I don't want to repeat what I wrote before but I think if too many people are drawn, by an uncritical endorsement of S2F by too many people and institutions, into wrong decisions, this won't end well.

What I question regarding to "S2F communication" isn't the fan club it has in this forum and among Bitcoin users in general. This is totally legitimate (as are my criticisms, also as a humble simple forum user). But when I see S2F endorsed by Binance's "academy" (lol) then I become skeptic (a "permabull" model would fit well with their growth expectations - again, fodder for the "bitcoin is a ponzi" guys).


4) S2F weight: The problem is that the price predictions which are so popular as colourful chart pics (by PlanB or their followers) really attribute 100% of the long-term price movement to S2F. Or where are other factors displayed in these charts? As I've mentioned above I don't discard S2F entirely as a factor, but I would give it a weight of less than, let's say, 30%. You may say that it describes hype cycles adequately, but there is at least one exception: the first one, in 2011, unrelated to all halvings. Only explainable by other factors related to demand.


5) "Tweaking" a wrong model infinitely: That's what some scientists tried in the 15/16th century to continue to sustain the geocentric model. You can do that for some time, that's reasonable, but if you exaggerate and a contender offers a better explanation based on completely different assumptions, you risk being looked at in the future as at the "wrong side of history". :)  (I have to clarify that I don't know currently a complete "contender", but that may change ...)

6) Importance of supply restriction making Bitcoin "sound money" - here we've simply different opinions. IMO the particular kind of supply restriction Bitcoin employs is not it's main feature, but I don't question people who think so.

By the way: My criticism is basically in line with what Daniele Bernardi wrote here in January (https://cointelegraph.com/news/three-reasons-why-planb-s-stock-to-flow-model-is-not-reliable) (discovered the article just now, I may check the "quantitative model" he's proposing alternatively).

Just one little quote at the end:

lol, no. Read again why I wrote that, if you want :D (it's a reaction on what you wrote in the paragraph I quoted.)

I am not sure what factors need to exist or not in order to allow stock to flow to apply to various shitcoins, so seems like a big waste of time to be going down such comparison road blindly and trying to use S2F with shitcoins... because I know that bitcoin is distinguishable from shitcoins, but I rarely debate about such nonsense in terms of comparison contrast because it just seems to lead to muddy thinking and also my point about any shitcoin likely needing to have something like 10x improvement over bitcoin in order to really be a possible contender.. and none of them seem even close in that arena.. so just seems a big wast of time to be either talking about various shitcoins or attempting to apply S2F to them... but do what you like... if that floats your boat.



Well if you have a price curve that seems to explain a vast majority of what is going on by focusing on supply and keeping demand as a constant, then why get caught up in trying to figure out if demand might have a better constant calculation.. sure with the passage of time, there might be some need to adjust the demand curve because like  you suggested the constant might work in years 1-12 but might not work so well in years 13 -20 or some other period.. so that might be part of something that might need to be tweaked at some point if it is appearing to not capture the rest of what is happening in the model... do even you are admitting that demand is included.. but you wished that it were NOT assumed to be a constant... or the formula for the constant needs to be tweaked somehow.. no problem.. tweak away.. especially if there ends up being a problem in this halvening period (which again seems to be too early to presume a problem for this halvening period, even though currently the spot price remains right around 2 standard deviations below expected price.



Not only do I imagine, you have said it a few times, already.


You might get caught up in too many weeds by attempting that when a constant seems to be sufficiently enough to project forward...


well, yeah.. if you had ways to simplify the demand curve without getting too caught up into weeds.. that might be helpful.

how about using a constant?  hahahahhaaha


It takes a while for any newbie to learn about the bitcoin space, and of course, each of us has to do what we can do.. and in the beginning it is likely more difficult to sort between good and bad information, but after we have studied the space for more than 100 hours, we start to become more confident and after 1,000 hours even more confident.


Yes.. you have said this, and in markets there are always going to be winners and losers..and I find no reason to change my opinion regarding DCA accumulating into bitcoin is a good idea.. while starting out relatively modestly, building up your accumulation and studying along the way... what else can you do?  except maybe avoid gambling, and you are largely suggesting that a lot of folks are prone to gamble, and sure that is true.. and they get reckt.. but how can you really stop them from gambling unless maybe suggesting another strategy that they might be willing to follow such as DCA accumulating that might cause them to be less inclined towards gambling strategies?


Sure..some people get caught up in various information sources that might not be very objective, but each person has to decide for himself/herself regarding how to structure their learning.. and maybe while they start to invest in bitcoin whether that is $10 per week, $100 per week or some other amount while they are studying the space, figuring out their own situation and attempting to apply their bitcoin allocation to their own circumstances with with various individually tailored criteria/preparation areas that I have already mentioned.


I don't know.. of course we can look at something for its fit with historical patterns to explain what has happened, and then it's projection forward.  So of course the BIGGER question is how much to use such model for projecting forward so maybe it is directionally correct, but not correct in regards to specifics, but even so if you are trying to project forward, then you can attempt to figure out what you are going to do in terms of whether you buy now or you wait... and really there are strategies that you can create for yourself that attempt to prepare you for a variety of directions that bitcoin could take, and if you end up being directionally correct, then does it really matter if you used the right model or not? ..

As I already mentioned, it seems to me that bitcoin is such an asymmetric bet to the upside that it would be foolish to not be making preparations, and in some sense it is a big so what if you place 10%, 30%, 50, 70% or some other number on S2F's predictive value because in the whole scheme of things maybe some of your views might influence you whether you start out investing $10 per week or $100 per week or some other amount, and surely if you are finding way more bullish models that are motivating you, then you may well gravitate towards more aggressive approaches, but still you should be limited within the prudence of your own finances and tempered by ongoing striving to learn along the way, too.


I doubt that letting the perfect be the enemy of the good, is a great approach.. so yeah, each of us has to take responsibility for our own adoption of a model that might end up being wrong or the model is getting tweaked too much that it was never correct. 

Ultimately I agree with you that no model should just be blindly followed merely because it sounds like what you want to hear.



For me, there seems to be some value in bitcoin's incentivizing hashpower from all over the world.  In my 8+ years in bitcoin, I have continued to be fascinated by the whole thing, and I am so surprised that 8 years later, bitcoin has played out quite more bullishly than even my most bullish of scenarios.. but continuing to study and to continue to find facination.. including that bitcoin is about 1,000x better than gold but only less than 1/10 the price.. so that level of bitcoin's value will likely continue to contribute to bitcoin's ongoing appreciating price.. to meet and exceed gold's value in this cycle or the next cycle, and then 10x to 100x will be easier to achieve, than 1,000x  in terms of bitcoin's price.. so for sure, it could take a while for all of this to play out.. even though people keep working on various aspects, network effects keep building and the various BTC price prediction price models help to give us more nuance than merely being directionally correct, but sometimes they can get us in the ballpark of magnitude correctness too.. even if they cannot necessarily get the timeline right with any kind of precision... but maybe in the ballpark, from time to time...including stock to flow.. getting us in the ballpark of the right kind of thinking about this asset class (aka bitcoin)..



Any of us can come up with all kinds of numbers.. and I consider the whole potential addressable market to be a bit more than $1 Quadrillion... so bitcoin is likely to absorb all of that at some point.. and it does not even matter if I am correct with any kind of accuracy, because directionally, it seems to be correct and stock to flow also helps us to see how to get there....even if there might be various ways that S2F gets the timeline wrong..,. and surely, if it takes 50 years, 100 years or 150 years for bitcoin to reach the $1 quadrillion plus market cap size, that seems to be a reasonable working premise to me, even if some folks seem to believe such numbers are nutso.. and I am not even using inflation for my numbers.  I am talking in today's values.. and also presuming that bitcoin is also going to create some more value, so that if there is really ONLY $900 trillion rather than more than $1 quadrillion, those are rounding errors in the sense that more value does end up getting built through paradigm shifting technologies/innovations such as bitcoin.


Fair enough.

I'll try to describe why I think that S2F has on a first glance worked so well, why I believe that it doesn't explain most factors of the last hype cycles - and some thoughts how it could be changed to replace the constant with a still simple, but not too simplistic demand-based indicator.

First, why did it work so well? We had in 2012/2013 and 2016/2017 two "post-halvening rallys", and 2021 we saw a third major price rally albeit a bit less sharp. S2F proponents argue that these were fueled mostly due to less miner rewards sold on the market. My explanation to that is a little bit different.

The first halvening had indeed a major effect on Bitcoin's available supply. Miners in 2012 were among the biggest sellers in the market, and in that situation the block reward sharply was reduced from 7200 to 3600 per day when only 10 million were mined (so supply inflation fell from ~7% to ~3.5%). So in this particular case, I guess this had really a major impact on the market, although there were also surely other factors (for example, I remember many new exchanges opened in that period, even if MtGox remained dominant).

2016/17 in my opinion it was already different. Markets were much bigger, miners began to leave the major sellers group being replaced by short/mid-term "traders", but the supply reduction was still relevant. There were already expectations of a similar post-halvening rally like in 2013. This imo helped sentiment to change and to get "the bottom in" in 2015 and fueled psychologically the (still moderate) rally in early 2016. Then just after the halvening there was a low-demand period with slightly bearish market, but in 2017 things were heating up again. I see also the shitcoin rally as a major factor here, particularly the ICO frenzy, because of their dependancy on BTC on exchanges.

Now 2020/21 I think that miners lost most of their relevancy in the sellers group. The 2020/21 rally was fueled by other factors in my opinion: first, a mostly psychologic post-halvening expectation; second the coronavirus pandemic, which made people massively register at online trading sites, either of stocks or cryptos, and led to things like the GameStop rally; and third, the "institutional investor" movement, with Tesla and Michael Saylor at the front. The last one was probably the driver for >30K prices. El Salvador came later and is imo the "culprit" for the ATH in the second half of the year.

The coronavirus pandemic's influence is particularly interesting. Before the rally we saw the deep crash to <5000$ levels, after a pretty bullish year 2019. Had this crash and the pandemic not occurred, it is likely the bitcoin hype cycle would have lead, for the first time in its history, to a new ATH before the halvening (in mid-2019, we saw already prices of only ~30% below the ATH, and the +10000 prices continued in early 2020, so March/April 2020 would have been a likely date for that ATH). But it didn't happen, so I'll not go into depth here.

What is my conclusion for a "better" S2F-influenced price model?

First, I would divide the "post-halvening rally effect" into two indicators: "real" supply effect (which can be measured with S2F) and psychological effect, with the first one declining over time, but the second one remaining relatively constant for a longer period.

Second, I would add an "usage" factor, with two components: 1) in times where blocks are not full would be majorly driven by transaction volume, and when blocks are full, by LN node stats. 2) an estimation of exchange users with the crypto.com methodology. Usage is not the same as demand, but has solid economics foundations in the Quantity Theory of Money.

These would be the two main ingredients of the formula. I would do now what PlanB did when he introduced S2F: search for the weight of S2F and "usage" the best approximate to the real price chart, and using this for.

A third ingredient could be "external factors". For example interest rates could be interesting to compare to Bitcoin prices; also the main stock markets. Regulation is another factor but this is already going to much "into the weeds" as you wrote; apart the "usage" factor should already covering these variations.

So this would roughly be my proposal for a price model. Like it or not :)

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Ah, there's imo absolutely nothing wrong with DCA. I would also recommend this technique to every newbie, but not citing S2F as the main reason but a likely adoption growth.

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I think that happened to most of us. But in my opinion this isn't a proof of Bitcoin's price increase being fueled mainly by supply-side mechanisms.

As I read through your above description, I was considering whether I should attempt to critique point by point or to even go into my own attempt at an overview perspective regarding various causal factors, and overall, I just find it too self-selectively problematic to be attempting to be going through those various single/multiple causal factor explanations when they are better overviewed the three dominant prominent and currently credible BTC price dynamics models of: 1)  stock to flow curves, 2) hype cycles (such as 4-year fractal - which is redundant with S2F) and coupled with 3) exponential s-curve adoption based on Metcalfe principles and network effects.  

To me, it continues to make little sense for you to be wanting to continue to be getting caught up in the various nonsense short-term explanations regarding how demand might have increased or decreased at various points in time including how public sentiment might have also changed based on various fluctuating macro factors and even the behaviors of various rich people/institutions and governments coming into the space to talk up the BTC price and through their own concrete actions of increasingly buying BTC, too... which surely these folks coming into the space - as well as the various shitcoin snake-oil salesmen imitators influencing the bitcoin space (and the
BTC price in various ways) have been kind of inevitable too..and part of network effects in regards to financialization, speculation and developmental experimentations.

In other words, I just see you getting caught up into too many details of various single/multiple cause explanations that fail/refuse to really account for overall dynamics of the three BTC price model considerations/framing that are the most relevant.


Well if no one has made such modifications and modeled it out, then what is stopping you?  personally it comes off as adding a whole bunch of noise that may or may not make much of a difference.

I already stated that I acknowledge that a lot of the ideas of PlanB and his stock to flow model already existed in BTC prior to PlanB coming on the scene in early 2019.. PlanB merely formulated such ideas in a data-driven way that helped a lot of people to potentially consider BTC price dynamics in better ways including considering limited supply dynamics in a better and more meaningful framework.

Personally, I have also never placed all of my eggs in the stock to flow basket - not because I find it wrong, but probably for reasons similar to you, I believe that it lacks some explanatory angles including a need to reemphasize the four year fractal and also a need to supplement considerations of network effects and Metcalfe principles.  I am not placing my overall framework into any comprehensive model, but I do believe S2F remains part of the best of frameworks when coupled as part of a three part package...and for sure some variance in there too in terms of there is an expected mean price, but the actual price can deviate quite far above or below the mean price which would not invalidate the model but only possibly cause it to either need more time for the whole matter to play out (and catch up to the mean) or maybe the men has to be tweaked to some extent.. perhaps? perhaps?  but no need to throw out the whole model when it explains a whole hell of a lot already...

and yeah, you d5000 can add your various variables to stock to flow in order to better explain it - and hopefully you are able to do it in a somewhat comprehensive way because it is pretty damned vague as you are currently explaining what you are going to add and how it is going to be added to perhaps tell us where we have been historically in terms of where we are at now and where we are likely to be going.


Well you can withhold information if you like and provide some vague ideas, and sure of course, everyone has to figure out for himself/herself whether to get into bitcoin and how to go about it.  Another thing is there are various levels of both receptivity and willingness for normies to actually look into any matter that you might spend time presenting/explaining to them.   A lot of newbies and normies out there in society do not even closely know what the fuck bitcoin is, even if they had heard about the name.. and they can maybe describe it from some kind of theoretical perspective, and surely it can take a very long time for them to actually even learn how bitcoin is differentiated from the various kinds of shitcoin projects, IPOs, Meme coins, DeFi marketed nonsense, NFTs - and some people will learn by getting distracted into nonsense, and a few will be able to focus on bitcoin right from the start to learn about bitcoin first - but still might get tempted into various distracting nonsenses about various shitcoins and also various shit theories about how bitcoin got to where it is (price and otherwise), where bitcoin is at currently (perhaps actual price compared to potential price) and where it is likely to go (various ways to attempt to accomplish expected value (ev) calculations).

Part of my point is that we can choose how much to share with folks regarding our own journey into bitcoin and our historical or current practices, and even spending a lot of time with folks in discussing these matters might cause them to remain apathetic or failing refusing to act.. and surely getting started with DCA'ing can at least get some folks started and inspire them to attempt to learn more about bitcoin.. not always but sometimes.  People are busy with their own lives and sometimes it can take a whole hell of a lot of time just to see that someone actually takes an active stance to start DCA'ing into bitcoin and to spend some time learning along the way (might have to move something else out of their schedule, no?.. not easy for any of us.. even if we are a student, for a variety of reasons we might not have bitcoin on the list of topics that we are aiming to learn first).


Seems to be a pretty strong piece of evidence of real world behavior of power behind the idea of securing the network and securing the ideas of bitcoin's scarcity as one of the rules.. of course, there are some other rules too that are enforced.. and if you do not attempt to account for how much power is going into bitcoin, you may well misunderstand (or misappropriate) what is bringing value to it and why so many folks are fighting to get it (mine it) and to have their various ongoing mining operations in place all over the world.. the running of nodes too - enforces the scarcity rules.. you going to try to change bitcoin?  or say some other system can challenge it?  better look at trying to steal (or co-opt) some of that hashpower.. how do you do it? incentives?  scarcity incentives?  cycles of bitcoin issuances and reduction of supply with the passage of time?  incentives for providing hashpower in bitcoin seems connected to the way supply is structured in bitcoin to me.

I'll try to explain why I think that these details matter. To be brief I'll center on one example: Lightning Network.

Bitcoin until 2018 (when LN was first implemented on mainnet) had a massive scalability problem. This would have limited its use cases a lot - only 1-2% of the world population, in the most optimistic scenario (nobody spamming nor using BTC more than a handful of times) would have been able to make a single transaction per year (be it for commerce, or savings, or speculation) if a second layer solution wasn't available.

LN changed that, to the extent that it is now possible to "onboard" the whole world (with some trickery like channel factories and user management, but it will work eventually). This means that a technical achievement, which can't be explained by S2F or other simplistic theories, immensely enlarged the potential user base. This changes the potential maximum value of the network and thus the whole potential price growth equation.

In my opinion even these small examples already invalidate a mostly S2F based approach. I'm also pretty much sure that the price increase of 2021 was only possible because of the positive scalability situation LN has generated. Scalability issues are no longer a threat to Bitcoin's overall viability.

Here's an article (https://protos.com/bitcoin-stock-to-flow-planb-invalidated-100k-by-december-womp-womp/) (not by me) that mentions other examples:


These aren't "details"/"noise" but major milestones, without them the adoption curve and also the price would look different.

I don't rule out to eventually build such a model. But first I'd like to investigate if there are other models already made which go in the same direction.

The "noise" has the potential to make the whole model more robust. PlanB has published his model in 2019. Basically his model "worked" until mid-2021, thus for two years (because the events before are better explained by his magical constant). If the price now continues to diverge from the S2F model, we can conclude that it's not an adequate model, to say it friendly.

If we find, however, the correct "noise" components then the model could be more flexible, in the sense of reacting to a slower or faster demand curve.

Yep, you're right - this is what I mentioned as the "post-halving rally expectation". Basically the idea is very simple.

And here I disagree again. His model is too static to be "meaningful", in my opinion.

That's good.

If I say to a newbie "Invest in Bitcoin, it will has an inmense adoption potential" instead of "Invest, because of S2F", then I'm not "witholding information". I would of course not withold the information about the scarcity model itself (halving cycle etc.), as I've stated already in this discussion, I consider a solid scarcity model a basic requirement for every "currency" or "asset". But why should I mention a model I consider wrong?

I however agree with the rest of what you wrote in that section about DCA/newbies.

For me "why so many folks are fighting to get int (mine it)" has a much simpler answer: because mining is a profitable business model. Bitcoin's scarcity is, again, the requirement for that to work. Miners obviously know about Bitcoin's scarcity model. But not necessarily because of S2F or generally a rising price prediction. They would be also happy if the current price/profitability simply continues.

I think it wouln't be easy for any altcoin operator to "steal" relevant hashpower from Bitcoin, because of all the advantage (above all regarding brand image and network effect) it has accumulated over the years. But if I wanted to try hard, I would focus on demand stimulation. Because the other way around (providing an even "more scarce" coin, e.g. one with completely fixed supply) has failed every time it was attempted.

So no, I don't see scarcity as the main incentive for providing hashpower. It is only the pre-requisite for any potential demand increase/adoption to work (because only if it's scarce, it's an asset), but it isn't the dominant price-predictive indicator for me.

Sure, I am personally familiar with such history, including the blocksize wars, and I really doubt your thesis that LN saved bitcoin from itself as a potentially deficient network.

Of course, LN brought additional value to bitcoin, yet a vast majority of the power of bitcoin was already embedded in its original design.. and sure, over the years, the various software updates have brought additional value, utility and abilities to continue to build on such an innovative and paradigm shifting phenomena that had already gone live in 2008 with the issuance of the whitepaper, and January 3, 2009 with the mining of the first block.

I am not very receptive to your assertions that bitcoin was materially and sufficiently inadequate prior to LN, segregated witness, taproot or any other subsequent and ongoing incremental innovations.. and for sure over the years, bitcoin's software development in terms of both power and useability are just part and parcel of one of the network effects related to development of the software, developers and ongoing developments that have been ongoingly taking place over the last 13 years + of bitcoin's existence.



You can see it how you wish, and I don't even feel inspired to battle you further on these matters because I believe that I have already largely responded.


From my perspective, that seems like a pretty lame explanation, but hey, you are free to believe what you like.



No reason for me to even address these... and like I said, you and a variety of other people have the right to get on whatever various tangents that you like in terms of attempting to understand where we are at, how we got here and where we might be going....


Fair enough.


Your deeming of the models failure does not mean that it failed... Again.. do what you like, but it seems quite far from failing, like I already asserted several times.



Maybe?  We are not even two years into this particular halvening period that S2F projects to average $100k for the whole halvening period.. so yeah.. perhaps the BTC price is going to continue to diverge, but as far as I can tell the model seems to be pretty much on schedule, or pretty damned close to being on schedule.

Maybe it is worth it for me to reiterate this one more time.  Largely S2F is attempting to project that BTC prices will average $100k for the whole of this particular halvening period.... so for sure, half way through the halvening period the actual price is way undershooting the projected $100k BTC price for the whole period..

Looking at the 104-week moving average (which is the average BTC price for the past two years), we can see that currently the 104-week moving average is at about $32k..

And if we look at the 208-week moving average (which is the average weekly price for the last four years), we see that it is at about $19,500, so for sure, the 104-week moving average already shows an already existing average that is way below $100k, and the 208-week moving average has a decently long way to catch up to get to $100k by the next halvening (during this halvening period)...

From my perspective it is way the hell too premature to be writing it off as if it were impossible or if it were a lost cause, blah blah blah... Even if we were to stick with a relatively historical average of how the 208-week moving average has been moving up, we are seeing that the 208-week moving average has historically moved up about 75% per year (and last year the 208-week moving average moved up around 130%)(look at my projection of the 208-week moving average) (https://bitcointalk.org/index.php?topic=5376945.msg58719591#msg58719591)...

You can also look at specific dates of the 200-week moving average as compared with spot price on this website (https://www.lookintobitcoin.com/charts/200-week-moving-average-heatmap/).
seems like a bunch of S2F deniers wanting to both de-emphasize S2F and to cause people to get distracted by a bunch of non-grounded whimsical nonsense who keep wanting to denigrate the importance of S2F, and as I already said several times, there is a lot of factual price movement that still lines up with S2F, but likely S2F is not the only reference to explain factual/logical based context for where we are at, how we got here and where we are likely going.



By the way, if we continue to get something like 75% appreciation of the 208-week moving average in the coming couple of years, that will still get us to around $88k by May 2024, which would hardly cause me to want to throw out S2F as if it were broken in any kind of meaningful way... even if it may well need to get tweaked to account for the data, rather than the projection of the data... .

I will also admit that it may well be a bit too presumptuous to project that the 208-week moving average is going to continue to move up at an average of 75% per year, but hardly seems as if there is any kind of urgent need to rush out and fix it.. because surely we can watch the data as we go and to see if the 208-week moving average continues to move up at that pace or a likely lower pace as bitcoin continues to mature and its overall market cap continues to grow... 


Nothing wrong if you can figure out ways to project the future BTC price more accurately.. no one is going to denigrate you for that.. but still seems to me that S2F is going to end up playing some kind of ongoing meaningful part, even if it might become lesser and lesser of a part.


Well.. attempted to be explained in a kind of everyman way, even though still based on attempting to scientifically plot out the data points and to describe the underlying logic in scientific terms that are framed also in layman ways of expressing it.


He plots out the weekly moving averages.. or is it the monthly?  whatever... it accounts for enough in my opinion.. why overcomplicate matters with too much (if any) irrelevant baloney.


Still seems that S2F would play a part, but of course, miners might have a variety of ways of calculating their business considerations and some miners likely cash out on a regular basis and other miners save more of their coins.  I believe the last couple of years, some of Saylor's ideas have become more pervasive in mining in terms of contributing to more of them attempting to hold onto more of their coins... and of course, there are going to be quite a few variables in terms of size of operation or even how long that they have been in it and even some of their geographical/jurisdictional concerns with the miners.


Sure.. Several have tried over the years, but there does not seem to be a whole hell of a lot of evidence of long term success of any of the shitcoins in that direction, so far... and you are free to bet on whatever horse that you like, including getting involved with various ongoing smoke and mirror sham imitation snakeoil projects.  Lots of folks get diverted in to such nonsense, and some make money through it too... again, seems like further noise to me, but lots of rich snot-nosed 14 years olds would laugh in my face regarding all the money they made in their baloney ponzi schee or money printing "creative" projects.



Hard to get even more scarce than bitcoin, even though some of the bullshit NFTs like to market themselves as such... but likely to find out that there is something about security through bitcoin as compared with whatever various chain some of that supposedly scarce baloney is propagated and marketed...

By the way, scarce is important, but liquid is important too.. and bitcoin has both and still building.


Seems that miners building around bitcoin have some better assurances than if they build around other projects, even though there are some miners who are creative in their switching abilities.. and so yeah, it could take 10, 20, 50 years to wind out a variety of these bouncing around of hashpower.. even though it seems that bitcoin is not even close to having anything with something close to rival it. the china mining was a good test of bitcoin's hashpower fluctuations in 2021.. and now bitcoin is back to record high hashpower, which seems to show that incentives to mine bitcoin seem to be working.. unless it is some kind of BIG ploy.. which it seems to NOT be because bitcoin mining hashpower does seem to have quite a bit of geographical diversity and even diversity in those controlling the mining.. even though it is not 100% transparent, either. 

Bitcoin mining does not seem to be broken in any kind of substantial or meaningful way, and I will again venture to assert that it is quite likely that there are a lot of very strong incentives that have already been designed into the reason that miners want to mine on bitcoin, including its openness, scarcity and difficulty adjustments that help for the measuring and monitoring of the network.

Well, I didn't really want to say something like "inadequate". However, we don't know what Bitcoin's final niche will be. Without LN, its best case scenario could have been a popular Internet currency for remittances, international e-commerce and some saving/speculation. This would also have been a "success".

But with second layers like LN, the maximalist and ultra-maximalist scenarios (i.e. Bitcoin as the main value mechanism of the world) have become possible, which before weren't, at least not if we assume that users should use decentralized mechanisms.

So what LN changed is not a question of "success" / "not success" or "adequate" / "inadequate" but a question of the maximum "grade" of success Bitcoin can achieve, which largely depends on the user base it can attend.

The problems related to Bitcoin's scalability aren't trivial at all, so it may have been possible that something like LN was never discovered. For example, second-layer development initially centered on sidechains, but even 6-8 (or more?) years after the first sidechain concept we haven't a working decentralized model for Bitcoin (Drivechain is cool, but its still, after several years, in its absolute infancy and has still to prove its usefulness). However you're right that "developer network effect" matters and there are a lot of incentives to find solutions for Bitcoin's problems (Bitcoin millionaires can fund development, etc.).

OK.

I even agree here with you that it's still premature, perhaps I wasn't clear enough in the last post. The scenario where the S2F-based price prediction diverges fundamentally from the real price evolution is a long term scenario. The next year we can't say its prediction has failed, purely from analyzing price.

But what we can, is look at its basic hypotheses which sustain it, and that's where I think it fails. But yeah, I think my point was already made clear enough.

You could make a blockchain where all coins are mined in the first year, and then miners only collect transaction fees. I think these things were already attempted (albeit mostly with premined shitcoins, which changes a lot I think). But I totally agree here: it will be 99,9% fail because of Bitcoin's already big advantage. And yeah:

Completely d'accord.

Agree here too, mostly - Bitcoin's incentive model is very well thought out, and I think the way the halving cycle is designed is also a component of its attractiveness. The only problem I have is with the predictive value of a model which only (or mostly) takes into account the supply fluctuations originated by halvings, and not other (imo more important) factors.

I believe we can close this discussion, we simply disagree on the weight we would attribute to the halving cycle (and thus, S2F) for price predictions.

We are not going to quibble about which word to use are we?  You have already asserted your opinion that there was something wrong with bitcoin prior to the addition of LN.  I don't agree with you, but you have your right to whatever assessment you want to make, even if it leads you into what I believe is a ridiculous way of assessing the matter...

From my perspective, that kind of thinking has a lot of muddled with BIG blocker nonsense talking points, and they were wrong about a lot of things - even if you want to continue to carry some of their underlying values by perpetuating some of their talking points, that's up to you.



First, our reality is that we do have a world with LN and a variety of other potential second layer solutions, so I see little need to speculate in this regard about the non-existence of LN and various second layer solutions.. they are a reality and a part of bitcoin's progressive journey in development (and not even necessarily any kind of outrageous surprise, either).

Second, maybe it can be helpful to consider bitcoin in terms of hypothetically what if this had not happened.. sure I will give you that..even if it is not seeming to be very in touch with actual on the ground facts.

Third, perhaps you have listed most of bitcoin's possible use cases absent LN/second layer solutions, and sure we agree that bitcoin is a success just with those.... if that happens to catch everything.


Maybe.  Perhaps.

Seems like a bit of a nonsense and detached from facts speculation, and I don't see how fruitful it is.

Maybe I have been too traumatized by too many trolls and disingenuine posters in the past.  They post about so many pie in the sky outlandish possible scenarios that could happen, and sure it is true that those things could happen, but we have more likely scenarios 1, 2, 3 and 4 and they are not even discussed, instead we devolve into talking about pie in the sky scenarios 5, 6, 7, and 8.  I don't find that as very good use of my time.. and it seems to devolve into thread cluttering.. taking us away from the more important and more likely scenarios 1, 2, 3 and 4.


Ok... no problem.  Bitcoin has more use cases with LN (and other second layer solutions) than without LN (and other second layer solutions).. agreed.


Hard to know.  There was a particular path that the 2015-2017 block wars took, and at some point in late 2015, Peter Wuille suggested Segregated Witness, which had been a problem that he had already been working on for another context, and it seemed to end up fitting well with resolving some of the blocksize and transaction issues that were perceived in late 2015.. and furthermore, Luke DashJR had made some kind of proposal to be able to accomplish such upgrade as a softfork rather than a hardfork, so that took bitcoin's development in that direction..

Whether the blocksize and scalability wars during that time were serious or trivial, they were about more than just scalability  and there were governance issues in the mixed way in which the matters were resolved and the solutions came about. It seems a bit weird to just attempt to talk about those kinds of resolution of the problem matter and about how bitcoin ended up resolving without putting it in the proper context and merely suggesting some kind of abstract problem about scalability - because scalability resolved in a direction in which it is never really completely resolved, but seems to be something that is going to continue to come up from time to time in terms of whether some adjustments might need to continue to be made along the way... and whether they are dramatized in the future or not is still to be seen.. I would imagine that there is going to continue to be some drama around these issues because not everyone agrees with how bitcoin is going and there are also ongoing attacks from within, too.



For sure, open source is interesting, and some proposed solutions might be before their time, but become more relevant at a later date.. and yeah, sometimes the funding is questionable, and sometimes developers might be lured towards projects to get paid rather than not paid, but we do have some seemingly benevolent funders in bitcoin, too... and we have a lot of people working on solving matters that they perceive as problems (issues) for free too.  Maybe aspects of our discussion here fits in this category, too?  Perhaps?



We have to see where the price goes first.  So I don't see how fruitful it is to say that if the price goes down instead of up, then we have to reassess S2F and perhaps pronounce it as dead at that time.  O.k... fine no problem...


but you seem to really be saying that "I am already anticipating that we are going to need to proclaim S2F to be dead by next year, so I am going to get ahead of the game, and pronounce it dead early."

Surely, you can pronounce it dead early if you like.  That's up to you.  I would rather just wait it out, and see how the data plays out before proclaiming it to be dead, and so at this time, from my perspective, we seem to have a valid S2F model that happens to currently be in a status of underperformance of expectations.  Maybe it will catch up?  maybe it will not?  I give few shits.. If it does it does, and if it does not it does not, but it seems to still be fairly on course, even if there is some current underperformance, so I am not going to be throwing it out and making up some other pie in the sky bullshit when S2F still remains quite explanatory.. even with its current underperformance status.  You are free to assess however you like and to prematurely throw it out and then have to come running back with your tail between your legs because you had been too rash.. I don't know if that will happen, but still I will proclaim those throwing out S2F and spouting out all the various ways S2F is dead don't even understand what the fuck they are talking about.. that's my continued perspective.



Yes... we seem to be beyond getting repetitive on this aspect.



Yes.. we have beaten this whole thing to death a bit more than either of us might be able to further tolerate and either of us could keel over if we continue.   :'( :'( :'(

Nothing too much going on with S2F recently - except that PlanB is still expecting the reversion to the $100k anticipated mean, and now he is saying "by 2023"... Interesting, no?

His most recent tweet:  "Both S2F and logarithmic regression point to $100K in 2023."

https://pbs.twimg.com/media/FLjvUj6XoAkC-Zy?format=png&name=small


https://twitter.com/100trillionUSD/status/1493207617820315650

The main reason that I came to this thread was because I had been thinking about my earlier post regarding any coin/project/protocol would need to be more than 10x greater than bitcoin to displace it - like what I said here:


Today, I had been thinking further about this idea that any challenger has to be at 10x better than bitcoin in order to overtake it, because there are probably 100s or even 1,000s of shitcoins that have made various improvements upon bitcoin that would have been better than bitcoin if those features had been in bitcoin at the time of bitcoin's implementation, and if they are wielding features that are 50% better or some multiple better than bitcoin, whether we are talking about transactions or blockchain management, then surely bitcoin can absorb/adopt those features on level 1 or some other 2nd or 3rd layer, and part of the criticism of bitcoin may well be that it is NOT going to be able to implement/absorb or adopt such new and improved features because such features were not "built-into" bitcoin at the beginning... yet since there are people building their businesses around bitcoin (network effects), that particular feature is going to need to be 10x better in order to attract the network effects over to it, rather than bitcoin. 

Getting back to stock to flow, part of the criticism that S2F is not correct happens to have some presumptions that bitcoin is not strong enough in order to really have the empowerment of the scarcity that it says that it has, and shitcoins/projects are taking away from some of this scarcity (and going to displace bitcoin).

Hey, I have no problem moving myself over to some other project or coin if it is actually going to become the bitcoin displacer (and the new incumbent), but many of us already likely realize the reality of the matter to be that so many touted features in various shitcoins (supposed bitcoin killers) might appear "on paper" to actually be 10x better than bitcoin, but still those features have to be so clear and convincing to lure bitcoin's network effects over to them... which many of us likely can recognize the difference between touted features (snake oil salesmen - or on paper features) versus the real deal application of such features..

We also, likely realize that nothing is either close to bitcoin or even close to actually having 10x or better features than bitcoin that would inspire even laypersons to gravitate over to it (beyond those laypersons who are temporarily deceived into going over to such shitcoin project hoping that they will become a rich early adopter, just in case the network effects are coming over to their shitcoin rather than staying on bitcoin)..

BCH and BSV have served as pretty decent examples of how much better the BIG block ideas have been... and got a lot of normies (and even smart people) reckt who believed in the BIG blocker ideas.  Furthermore, their dreams of getting rich quicker through their new innovative BIG blocker coins have been snuffed out.  BIG blocks was not a better idea.. and surely not anything close to 10x better.

Plan B is desperate to keep the S2F model alive, and I think he has a point, but as long as we keep on the 1sd+ Of the chart, the narrative can be hard for him.

Also I think it’s not completely fair to change the model conclusions: the said “100K by Dec 2021”, not 100K as Halving Era Average.
You all know how I like the man, but this delusional changes of perspective don’t make him honour.

I get confused too about what the hell PlanB had been saying at various points in time because he did get caught up in some seeming flaming wars and then too many specifics in his interpretation, sometimes.   

I believe that the S2F model has always said $100k as an average for the period.. but he mixed up his discussion of his "proprietary" floor model with his S2F model when getting into some of those specifics. .and I was never really any fan of getting into specifics..

Of course, staying within 1 SD is way better than getting into 2SD.. and probably if the BTC price spends too much time outside of 2SD or the edge of 2SD, there is some kind of tweaking that is needed with the model. 

I know that a lot of people say bitcoin is math and all that bullshit, but there are still a lot of weak aspects that cause BTC price to be both influenced by human behavior and to be manipulated by human behavior, so in that regard, I have no problem with any kind of model to be tweakable to account for actual facts as they play out... ... and I know that since my early days on the forum I would criticize quite a few members who had similar models to the S2F model and seemed to be too overly reliant upon math and trying to lock bitcoin price into some kind of exact (rather than loose) formula.

At the sake of redunancy, I still think that S2F remains amongst the best of the models that are out there, and even if there ends up needing to be some tweaking of what the average ends up being for this halvening period to have to reduce it from $100k to $80k or even to $60k, I doubt that there is any major issue from my point of view regarding those kinds of tweakings, if they were to have to take place.  I already mentioned that a mere ongoing trajectory of 75% annual increases in the 200-week moving average (which is completely consistent with overall historical numbers - and even low as compared with the 2021 performance of 130%), bring the BTC average price at the end of this halvening cycle to $88k... so the model is really not very far off, if we end up getting something like $88k - but even if it performs lower than that, we surely have to see how such performance ends up playing out before getting too upset about the model ... and even having problems in which we believe that there is some model that is actually in existence that would have come closer to being more accurate.

I do understand why you are less than excited about some of the ways that PlanB had been talking about his model, especially some of his arrogance in mid to late 2021, and then some of his seeming shifting of the narrative in late 2021.... and sure maybe he had been getting too caught up in absolute statements (which he is not completely innocent of that currently), so surely sometimes it does seem that he needs to take some of his emotions and some of his getting too caught up in specifics out of his model presentations and discussion of the model... in order to represent the model better.

I didn't have this understanding of the model, but it might be my fault on this. After all this is pretty reasonable looking at the graph, but he actually said first:"100K by December!"

As per the "Floor Model" that one is dead. PlanB himself admitted it failed and he won't use it never again.

I completely relate to this and I agree 100%.

Finally PlanB returns tweeting about Stock to Flow!

https://i.ibb.co/NNmN2hF/60046111.png (https://twitter.com/100trillionusd/status/1521816544837316608?s=21&t=xi3A4pEF2m3KdAIkDUV93Q)

Coming back to an older version of his graph, that better adapt to this delayed pump!
Mixed feelings.

This tweet was shared yesterday. PlanB just missed one day. He should tweet that post on May 3rd, 2022. We have always seen a smooth pump after halvings. He also wants to watch what Bitcoin does in the next two years. The following estimated halving time is May 3rd, 2024 (Exactly two years). Only 105,029 Blocks remain until halving. I am excited. I want to take a sleeping pill and wake up on 4th May 2024.

More moving of the goalposts.

I doubt that there is any reason to get overly anxious in terms of wanting the future to be rushed.

Seems to me that there are reasons to attempt to enjoy life as we go and the process as it goes.

I am not going to doubt that so many people get anxious in terms the NGU (number go up) technology to play out... yet not even that NGU technology is guaranteed.

Individuals vary so much, and frequently, I am not sure what our presumptions should be - except that if we are still in stages of accumulation than there should be some gratefulness that the price is staying down below expectations somewhat.  Maybe some guys believe that if the number just goes up, then they don't need as many coins, and in that case, they already have enough coins.  But is that really realistic to expect the BTC price to go up without any suffering along the way.

Some guys might just be inclined to suffer, and going to complain no matter what.  For example, "we only got a 3x to 6.5x and we have been stuck in the 3-5x territory for like forever.  I wanted moar!!!"

It's not good to have too many expectations, even though many of us likely realize that this bitcoin thingie is going quite well (even if it could have gone better) so far.

By the sure we "always have two years left" but depending upon what is being talked about. If there was a claim two years ago about the peak of the price likely happening at the end of 2021.. then there is a claim that 2 years has passed.  Now, there is a claim that there is a need to account for the average BTC price for the whole havening period, which ends up being two years from now.. but then there might be a question about did the peak happen or not.. No one is going to know, except to proclaim that the odds still remain pretty good that we still could get some kind of price peak that will bring our average price for the whole halvening period up to get closer to what either the old model or the new model predicts.  The old model said $100k.. so why back off of that unless you believe that the price has already spiked.. but then if the new model proclaims only an average of $55k, that will be easier to reach.




There gotta be some humor in some of this.



hahahahahaha - especially if we are talking about it could be model 1, or if not model 2, and if not model 3 might be o.k.. ; too...

By the way, the 100 week moving average is currently at $35k (which would be the average for the whole of this halvening so far), but if we take the average of the last 4 years, then we end up with the 200-week moving average which is currently at about $21,700, so can that average of the 200week moving average get up to $100k in the next to years, and if not the back up would be to say that we think that it may well only get up to $55k within the next two years.

In other words, PlanB's seeming flip flopping is not really helping matters... let's just continue to see what happens.. and actually I have no problem or gripe if the model ends up having an average that is either right on, underperforming expectations or overperforming expectations... .. directionally, both our 100-week moving average and our 200-week averages continue to move up... so everything seems to be working out fine, even if we cannot really know specifics with any kind of precision.. but what else is new?



Sometimes I am not sure if those "moving of the goalposts" claims are fair - or maybe sometimes PlanB has some presentation issues.

There has always been a kind of range of expectation, so if the ultimate price ends up falling exactly within the range of expectation, then Plan B looks like a genius, and if he reframes the expectations to attempt to conform with data as it is playing out, he is accused of both not being sufficiently scientific and also to be maintain a kind of rolling model rather than sticking with his earlier claims.

Hello everyone and fillipone!

I would translate this topic created by you on the portuguese board (but they were faster than me lol)

Anyway, i'm sending this message to congratulate you for this excellent topic you created to share your knowledge  :)

A few years ago, I was studying technical analysis and discovered two relevant "types of indicators" which are the Stock-to-Flow Model and "2 Year MA Multiplier"
I don't know if in fact these types of indicators are 100% assertive! But I believe there is a possibility that we can get a sense of how this works (generally speaking)

If anyone wants take a look:
Please don't negative me or criticize me, I'm just sharing this topic that I created because it might be useful for another user

best,
gagux123

Gráficos p/ analise técnica - Stock to Flow / 2 Year MA Multiplier (https://bitcointalk.org/index.php?topic=5238832)