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Bitcoin's Stock-to-Flow (S2F) model, which predicts price based on scarcity, has historically shown a 95% correlation with BTC's market price movements.
Bitcoin's Stock-to-Flow (S2F) ratio, a model that assesses scarcity by comparing the current circulating supply to new production, has historically demonstrated a 95% correlation with Bitcoin's price movements [5]. This model, initially proposed by analyst PlanB, suggests that Bitcoin's value is driven by its increasing scarcity, similar to precious metals like gold and silver [2, 5].
| At a glance | |
|---|---|
| Current S/F Ratio | 121.5 [5] |
| Last Traded Price | $63,540.39 [5] |
| Predicted Price (S2F Model) | $637,694.446 [5] |
| Days to Next Halving | 853 [5] |
The Stock-to-Flow (S2F) ratio is calculated as the ratio of the current stock of a commodity (Bitcoin's circulating supply) to the flow of new production (newly mined bitcoins) [2, 4]. A higher S2F ratio indicates reduced annual inflation for an asset, making it more scarce and, by extension, more valuable [4]. For Bitcoin, this scarcity is fundamentally linked to its "halving" events, which occur approximately every four years or every 210,000 blocks [4]. During a halving, the block reward given to miners for securing the network is cut by 50% [4]. For example, the block reward decreased from 50 BTC in 2009 to 12.5 BTC in 2019, with the next halving expected to reduce it to 6.25 BTC [4].
The S2F model uses the formula: Price = 0.18 × (S/F)^3.3 [5]. This formula has historically shown a 95% fit quality with Bitcoin's last traded price movements over 215 monthly intervals, incorporating 34 total halving events [5]. The model predicts a price of $637,694.446 based on a current S/F ratio of 121.5, compared to a last traded price of $63,540.39 [5].
Bitcoin's protocol is designed to increase its stock-to-flow ratio significantly over time, a characteristic that proponents argue differentiates it from other assets [4]. The model tracks Bitcoin price data alongside S2F predictions and marks all halving events, including those in 2012, 2016, 2020, and the upcoming 2024 event [5]. Forecasts also include estimated S/F ratios after the 2020 and 2024 halvings [4].
The next halving event is 853 days away, with subsequent halvings scheduled for December 2028, December 2032, and beyond [5]. This programmed reduction in new supply is central to the S2F model's premise that Bitcoin's scarcity will continue to drive its valuation [4, 5].
The S2F model posits that Bitcoin's fixed and non-inflationary monetary policy is crucial for its ability to accrue value and potentially disrupt traditional assets like gold [4]. The ongoing increase in Bitcoin's scarcity, driven by its halving schedule, remains a key factor for observers of its long-term valuation [4, 5].
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It is a mathematical ratio calculated by dividing the total existing supply of an asset (stock) by the amount of new supply produced annually (flow).
Halving events reduce the block reward for miners by 50%, which lowers the annual flow of new Bitcoin and increases the S2F ratio, theoretically signaling higher scarcity.
While it was influential in earlier cycles, its predictive accuracy has weakened as Bitcoin's price has frequently deviated from the model's projections, leading many to use it as a historical reference instead.
The model is applied because Bitcoin has a limited, code-defined supply schedule, making it comparable to scarce physical commodities like gold.