Stock-to-Flow Model: Modeling Bitcoin's Value with Scarcity

[JayJuanGee]

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.  

[1713909520]

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[1713909520]

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[1713909520]

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[fillippone]

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:



New ATH is slightly higher than model price!



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!

#bitcoin BTCprice $25.3K above S2F model value $24.9K
real time S2F charts: https://digitalik.net/btc/

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

[fillippone]

@100TrilllionsUSD celebrates the 2020 with the following tweet:




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.

[casperBGD]

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

[fillippone]

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

<…>
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?

[casperBGD]

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

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

~snip
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

[fillippone]

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

LP243
@100trillionUSD
 Demand for #Bitcoin


 will skyrocket

PlanB and I chat:
- How S2F and S2FX models are going
- HODL waves
- Bitcoin cycles and thoughts on final cycle
- Inflation and negative rates
- Cash and carry trade

Subscribe and share!

https://stephanlivera.com/episode/243/

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





What they talked about on this podcast:

Bitcoin price has been rising and some argue that it is tracking along with the S2F model! Others argue that this is statistically invalid. PlanB, pseudonymous analyst and creator of the S2F and S2FX models rejoins me on the show to talk:

• S2F and S2FX vs recent market action
• Critiques and spurious correlations
• Comparison with past cycles
• PlanB’s thoughts on whether this is the final cycle
• Macro factors – Tether
• Negative rates
• Cash and carry trade

You can listen to the podcast clicking here


Previous Stephan Livera podcasts with PlanB

• SLP67 Plan B (@100trillionUSD) – Modelling Bitcoin’s digital scarcity through stock-to-flow techniques
• SLP86 PlanB – Frontrunning the Bitcoin Halvening?
• SLP122 PlanB – Responses to the S2F model
• SLP171 PlanB & Saifedean Ammous – Bitcoin S2FX, S2F, and Evolution From Collectible to Financial Asset

[JayJuanGee]

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

LP243
@100trillionUSD
 Demand for #Bitcoin


 will skyrocket

PlanB and I chat:
- How S2F and S2FX models are going
- HODL waves
- Bitcoin cycles and thoughts on final cycle
- Inflation and negative rates
- Cash and carry trade

Subscribe and share!

https://stephanlivera.com/episode/243/

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





What they talked about on this podcast:

Bitcoin price has been rising and some argue that it is tracking along with the S2F model! Others argue that this is statistically invalid. PlanB, pseudonymous analyst and creator of the S2F and S2FX models rejoins me on the show to talk:

• S2F and S2FX vs recent market action
• Critiques and spurious correlations
• Comparison with past cycles
• PlanB’s thoughts on whether this is the final cycle
• Macro factors – Tether
• Negative rates
• Cash and carry trade

You can listen to the podcast clicking here


Previous Stephan Livera podcasts with PlanB

• SLP67 Plan B (@100trillionUSD) – Modelling Bitcoin’s digital scarcity through stock-to-flow techniques
• SLP86 PlanB – Frontrunning the Bitcoin Halvening?
• SLP122 PlanB – Responses to the S2F model
• SLP171 PlanB & Saifedean Ammous – Bitcoin S2FX, S2F, and Evolution From Collectible to Financial Asset

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).

[fillippone]

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






In any case, interesting times ahead.

[mk4]

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.

[Dabs]

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.

[fillippone]

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

Let's take USD out of the equation🌪�

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:

So what do you think: will Btc and Gold find a balance in the end while both have similarities on usage?

I don't know. Either it will be a winner takes all thing, and btc takes out gold's monetary premium (and gold stock will go down). Or gold and btc will exist together, one as a physical sov and the other as digital sov. time will tell

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...

[Dabs]

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.

[fillippone]

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.

[AndySt]

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.

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.

[Dabs]

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.

[acquafredda]

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.

[fillippone]

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.

Straight line up to $1trillion market cap! #bitcoinBTC

going for gold next ($10T)

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.

[Poker Player]

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.

Straight line up to $1trillion market cap! #bitcoinBTC

going for gold next ($10T)

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.

[fillippone]

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

5. Silver S2F 33.3 (900,000/27,000 tonnes) and market value $561B

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.