Stock-to-Flow (S2F) model
It is one of the most popular models used to predict the price of Bitcoin based on scarcity and supply. It was developed by an anonymous analyst known as PlanB, and it relies on comparing the amount of Bitcoin available in the market (Stock) with the new amount being mined annually (Flow).
🛠️ How does the S2F model work?
The Stock-to-Flow ratio is calculated by dividing the total supply of Bitcoin by the number of Bitcoins mined annually.
Every "halving" occurs every 4 years, where the mining reward is cut in half, reducing the flow, and thus increasing scarcity, which usually leads to a price increase.
📊 Impact of the upcoming halving (2024-2025)
In April 2024, the number of new Bitcoins mined daily will decrease from 6.25 BTC to 3.125 BTC.
This will lead to a reduction in new supply, increasing scarcity and driving the price up according to the model.
📈 Bitcoin price predictions according to the S2F model
🔹 After the halving in 2020:
The model predicted that the price would reach $100,000 during the current cycle, but Bitcoin did not reach this number, raising debates about the model's accuracy.
🔹 After the halving in 2024-2025:
According to the S2F model, Bitcoin could exceed the $100,000 - $200,000 barrier during the next cycle.
Some believe that institutional adoption, ETF funds, and government acceptance may drive the price higher.
⚠️ Is the S2F model accurate?
✔ Why might it be correct?
Historically, there has been a strong increase in the price of Bitcoin after every halving.
Scarcity plays a significant role in driving prices up, as is the case with gold.
❌ Why might it be wrong?
The market does not only depend on supply and demand but is also affected by other factors such as regulations, investor sentiment, and the state of the global economy.
The model was not 100% accurate in the previous cycle (2020-2021).
If institutional adoption continues and investments increase, this may be achieved.
However, if strict regulations or major financial crises arise, this may impact the expected growth.
🎯 What do you think? Do you believe Bitcoin will jump after the next halving? Or has the market become more complex?
