Bitcoin's Stock to flow model seems accurate !

[exstasie]

You can't make any sort of good long-term prediction while completely ignoring demand. Stock to flow model only takes supply, it assumes that demand is constant, but it won't be. It can explode or it can decrease. In the future the rate of new people buying Bitcoin will definitely change. A negative scenario would happen if everyone will be aware of Bitcoin but no one will be interested. A positive scenario is a mass adoption based on fundamentals rather than speculation.

To me, it has more value as a trend or regression model, not as some theory about fundamental valuation. Is the trend holding? Does the model correlate to price? If the answer to those questions is yes, then stock-to-flow is of interest to me.

These are not new questions, nor you are the first asking them.
So these points were addressed many times, even by PlanB himself.
You can find answers here: Stock-to-Flow Model: Modeling Bitcoin's Value with Scarcity

Spoiler alert:the answer to both questions is YES.

That was already obvious enough to me from chart analysis. I wasn't actually asking those questions. I was using them to explain why the model holds value.

If stock-to-flow were just a theory about the fundamentals underlying BTC price, I would have zero interest in it.

[Thavash]

These are not new questions, nor you are the first asking them.
So these points were addressed many times, even by PlanB himself.
You can find answers here: Stock-to-Flow Model: Modeling Bitcoin's Value with Scarcity

Spoiler alert:the answer to both questions is YES.

Thats a great post - thanks

[el kaka22]

Obviously speaking there is some value to stock to flow model, nobody could deny the fact that bitcoin doesn't follow the method, however we should not forget the big difference between bitcoin and all the other investments, in bitcoin some rich dude could sell 100k bitcoins all at one night, rare occasion that basically happens maybe once every few years, but it is totally possible, or some super rich dude could buy 250 million dollars worth of bitcoin as well, rarely happens again, but still could happen.

When those unexpected and rare things happen that means bitcoin could get out of the model and could reach to places we never imagined it could, do you think 20k was actually in the charts? Nobody could have guessed something like that but it did happen, think of it like that.

[exstasie]

Obviously speaking there is some value to stock to flow model, nobody could deny the fact that bitcoin doesn't follow the method, however we should not forget the big difference between bitcoin and all the other investments, in bitcoin some rich dude could sell 100k bitcoins all at one night, rare occasion that basically happens maybe once every few years, but it is totally possible, or some super rich dude could buy 250 million dollars worth of bitcoin as well, rarely happens again, but still could happen.

When those unexpected and rare things happen that means bitcoin could get out of the model and could reach to places we never imagined it could, do you think 20k was actually in the charts? Nobody could have guessed something like that but it did happen, think of it like that.

A single whale selling huge lots on spot exchanges will cause an aberration on the charts. It could even trigger a mid-term downtrend. The November 2018 crash comes to mind.

However, I don't see why that would break the long term regression model stock-to-flow is based on, which accounts for significant fluctuations from the mean. Temporary deviations from the trend are normal.

[fillippone]

<...>
However, I don't see why that would break the long term regression model stock-to-flow is based on, which accounts for significant fluctuations from the mean. Temporary deviations from the trend are normal.

This.
S2F models are not meant to be used for trading, and price can, for many reasons that account for the residual 5% of price of bitcoin, deviate largely, but temporary, from predicted price. Trading has a time horizon, be it intraday, daily, or weekly, that is not compatible with the model time-frame, which has months as unit of measure.

This model is meant to be used for investment, and helping discovering the true value proposition of bitcoin.
Of course the co-integration of the model is going to break sooner or later, but until then, the guideline of the model price can be taken as valid.

[fillippone]

Basically, this measures the total supply of a commodity versus the expected incoming supply , and it could indicate the value of the commodity. It was found by some people a few years back that it seems to be tracking the price of Bitcoin fairly well ! Whats your view , does this prove that $100k and later on $1M are feasible ?

This is a financial game and there are a lot of coins for us to buy, bitcoin is not coin. That's my opinion, because we have so many good altcoins like ETH, Chainlink, Tezos, BAND, ... so why does bitcoin's supply make its price so high?
This is ridiculous, the whales will not be easy for us to make so much money. they will gradually change trends and sometimes bitcoin is not important over the years to come. it is possible that bitcoin will only hit $ 20k again, but not increase further.

Quoted for future reference. The cringe will be powerful when reading these liens in the future.
Stock to Flow is not applicable to shitcoins as there is not unforgeable scarcity for them (actually there is not even scarcity for ETH, whose total supply is unknown to the most).