Stock to flow concept, a reliable price prediction factor or scarcity indicator?

[Olotu20]

Stock to flow is a concept in Bitcoin that, is used to estimate the scarcity and possible value of Bitcoin based on its limited supply rate. This concept make use of the already existing Bitcoin that, are in supply which has been mined known as the ( stock ) With the amount of New Bitcoin mined every year which is considered as the ( Flow).

The mathematical formula when calculating the stock to flow concept is = The amount of existing supply ÷  by the annual new supply.

Every four years it should be noted that Bitcoin experience having, this cut down the amount of Bitcoin that has been mined to two. This consiquentily reduces the flow rate thereby, increasing the stock to flow ratio in the Bitcoin block chain making Bitcoin more scarcer over time. But there are two diverging opinions about this concept because, there are people who see S2F as a price prediction factor due to the facts that scarcity leads to long term price increases.


While others also argue that Bitcoin price can also be influenced by demands in market, regulations and markets sentiments etc and so stock to flow concept if you ask me, should be seen as a one concept when ever we are talking about Bitcoin scarcity rather than using it as a price prediction factor or tools.


What is your options concerning stock to flow ( S2F).

[Smartprofit]

I believe Bitcoin has two core characteristics: scarcity and intrinsic value. Bitcoin's intrinsic value is determined by its use as global, decentralized money.

What, in my opinion, is the cause of Bitcoin's current crisis? Representatives of the traditional financial system refuse to recognize Bitcoin as global, decentralized money. They even propose calling Bitcoin not a currency, but a purely digital asset... They propose defining the value of this asset solely based on its scarcity. Their narrative: scarcity equals value...

However, in my opinion, scarcity alone is not enough to determine the value of an asset. Its value comes from its utility. A financial instrument for preserving capital from inflation (in the long term), by the way, is also useful. This is precisely why gold is a valuable asset (it benefits investors).

However, if Bitcoin's utility is deliberately undermined through government regulation, centralized custody, bans on anonymity and privacy on the network, the introduction of KYC and AML procedures, and the creation of derivatives, then Bitcoin's underlying value will diminish. This is precisely what is happening now. And scarcity is no longer helping Bitcoin. As a result, we are seeing a low Bitcoin price and declining investor interest. 🙎

[SquirrelJulietGarden]

Stock to flow is a concept in Bitcoin that, is used to estimate the scarcity and possible value of Bitcoin based on its limited supply rate. This concept make use of the already existing Bitcoin that, are in supply which has been mined known as the ( stock ) With the amount of New Bitcoin mined every year which is considered as the ( Flow).

What is your options concerning stock to flow ( S2F).

Stock to Flow from PlanB was a famous model for Bitcoin price prediction but it failed in two market cycles ago. In the last market cycle, this model was no longer mentioned like in 2020 and 2021 years. This information and loss of the S2F model popularity and appearance on media can give you some ideas about why.

This model was no longer accurate and people don't want to use it for predicting Bitcoin price.
Plan B is right that "all models are wrong but some models are useful".

In a latest market cycle, people changed to this model.
Giovanni Santostasi - The Bitcoin Power Law Theory.

[Aanuoluwatofunmi]

While others also argue that Bitcoin price can also be influenced by demands in market, regulations and markets sentiments etc and so stock to flow concept if you ask me, should be seen as a one concept when ever we are talking about Bitcoin scarcity rather than using it as a price prediction factor or tools.

Let's not always believe on what they are saying because not everyone online are saying the actual thing about Bitcoin, the market is volatile doesn't mean that we are at risk, bitcoin is not going to be that scarce in such a way that makes it centralized, instead we should see discussity has been part of the reason why it increases in value because of the high demand and the effectiveness of its application in diverse ways.