The meteoric rise of Bitcoin has captured the imagination of investors worldwide. But for those seeking a roadmap in this ever-shifting landscape, the Stock-to-Flow (S2F) model created by PlanB offers a unique perspective. By analyzing Bitcoin's scarcity relative to traditional assets, S2F can inform entry and exit strategies for long-term investors.

Understanding Scarcity's Power

At its core, S2F revolves around a simple concept: scarcity fuels value. The model compares the total amount of Bitcoin in circulation (the "stock") with the annual inflow of new coins (the "flow"). A higher ratio signifies greater scarcity, similar to precious metals like gold. This scarcity, according to S2F, should naturally push Bitcoin's price upwards.

Predicting the Future through History

S2F takes this concept a step further. By factoring in Bitcoin's programmed halving events that cut new coin creation in half every four years, the model generates future price forecasts based on predicted scarcity.

A Guiding Light, Not a Crystal Ball

While intriguing, it's crucial to remember S2F's limitations. As a relatively new model, its accuracy for long-term predictions remains unproven. Moreover, it focuses solely on scarcity, neglecting other influential factors like market sentiment, regulations, and unexpected events that can significantly impact price.

Bitcoin Price Prediction Using S2F

The Stock-to-flow chart is a popular tool that leverages the S2F model to predict future Bitcoin prices. This chart overlays the Bitcoin price on the estimated future price point based on the stock-to-flow ratio.

Here's an example of how the S2F chart is used for prediction (these are historical predictions, not actual results):

• The Stock-to-flow chart predicted that the price of Bitcoin on December 31st, 2022 would be $78,280.

• It also predicted a price of $81,956 for December 31st, 2023.

• There was a significant jump predicted for the following year, with a price of $306,984 expected for December 31st, 2024.

Important to note: It's important to remember that these are just predictions based on the S2F model, and the actual price may differ due to the factors mentioned earlier.

Why Is Stock-To-Flow (S2F) Useful For Bitcoin Investors And Traders?

S2F is useful because it offers a unique perspective on Bitcoin's value by focusing on its supply schedule. While many other indicators forecast Bitcoin's price, S2F stands out by analyzing the limited availability of new coins.

How To View The Chart

The Bitcoin S2F chart typically displays the price overlaid on the stock-to-flow ratio line. Historically, the price has tended to follow the stock-to-flow trendline. This suggests that analyzing the projected stock-to-flow line, which is calculable based on Bitcoin's mining schedule, can offer insights into where the price might go in the future.

Additional Features of the S2F Chart

Some S2F charts include additional features like:

• Halving Dots: These colored dots on the price line indicate the remaining days until the next Bitcoin halving event. Halvings reduce the number of new Bitcoins generated, further impacting scarcity.

• Divergence Chart: This tool shows the difference between the actual price and the predicted price based on the stock-to-flow model. It helps visualize how price interacts with scarcity over time.

Remember: The S2F model is a valuable tool, but it shouldn't be your sole decision-making factor. The cryptocurrency market is volatile, so combine S2F with other strategies and conduct thorough research before making any investment decisions.