Is Stock to Flow a Reliable Indicator of Bitcoin's Value?

Stock to flow is a way to look at Bitcoin's scarcity and its potential value based on how many coins are out there versus how many are being mined yearly. Basically, it’s like taking the total Bitcoin supply and dividing it by how much new Bitcoin is created each year.

I think Bitcoin's appeal lies in its scarcity and its value as a decentralized currency. But right now, many in traditional finance just see it as a digital asset and not real money. They love to hype scarcity as the main factor for value, but I'm not sold on that being enough.

The Stock to Flow model was hyped by PlanB but honestly, it didn’t hold up during the last couple of cycles. Nowadays, it’s not getting much traction like it did back in 2020-2021. This could say a lot about its accuracy and why people are moving away from it.

Gotta be careful about what people say online. Just because Bitcoin is volatile doesn’t mean it’s going to centralize or lose value. Demand still plays a major role in its price increases there’s a lot more to it than just scarcity.

(1) Demand (2) Market sentiment (3) Regulatory influences (4) Interest rates (5) Institutional uptake There are so many factors that go into Bitcoin’s price. Scarcity by itself isn’t the whole picture. With everything we've seen lately, Stock to Flow seems kinda outdated and just a glimpse at scarcity.

Honestly, Stock to flow isn't really about scarcity. It’s more focused on supply. To make it useful for predictions, you would need a demand theory to go along with it. Some recent versions tried adding basic demand curves from Metcalfe's Law, but they are still missing a lot.

Using Stock to Flow to predict prices is tricky. Sure, it can hint at scarcity, but the market’s complexity means tons of other factors are influencing prices, not just Bitcoin’s supply.

As I see it, Bitcoin’s total supply is capped around 21 million. Stock to Flow just describes how Bitcoin enters the market, not its price movements, which depend more on demand and current market supply than anything on the blockchain.

The Stock to Flow idea is one of the most ridiculous things I've seen. It's just noise from those clueless about Bitcoin. They’re basing scarcity on almost 20 million BTC mined and only a tiny bit left. Halvings barely matter now.

And don’t forget, many Bitcoin are lost for good. That adds to its scarcity, right? But who knows if they'll ever be accessible again, especially with advances like quantum computing.

Not for Bitcoin though. Stock to flow might work for stocks, but it doesn’t fit Bitcoin. If it’s not widely recognized, it loses its usefulness.

I mostly agree. But there are gaps in this view. Bitcoin’s value really comes from the energy put into it. Security is about energy and incentives, minus block rewards, which are shrinking. It will become even more of a Store of Value.

To me, Bitcoin is both money and a monetary system. Its purchasing power can only go up if more people join and use it, or if existing users become more productive in the ecosystem.

These models are often better for explaining past events than predicting the future. They failed badly in forecasts. If price was based only on scarcity, collections would be super valuable look at stamps; many are tanking.

I think security is vital to Bitcoin's value too. But I’d look at it from the average transaction value, not the total market cap. The risk of 51% attacks comes from what could be stolen in double spends.

Agree on that! Attacks now seem more likely from political motives than profit. As Bitcoin gets tied to more economies, it could face serious threats from entities like state actors in the future.

I like the time-bound attack theory. If the cost to attack Bitcoin isn't keeping pace with its security, that’s a big red flag. The ratio of money protecting Bitcoin to what it actually protects is widening. That can't be good.

S2F is definitely about scarcity. But here's the catch: treating a supply ratio like a price model? That’s flawed. Price depends on demand, and no supply formula can capture that. Gold and silver have their own ratios, yet they aren't priced that way.