December 2, 2023

Copy-paste | Bitcoin exchange rate falls short of Stock-To-Flow model

For an asset such as Bitcoin, the Stock-To-Flow ratio is calculated as the ratio of the total emission volumeto the number of coins produced in one year. In other words, it gives us an idea of ​​how many years it will take to mine all the coins, assuming the mining volume remains the same.

Assets with a high Stock-To-Flow ratio(STF) are more expensive because they are considered rare. Gold has the highest ratio of 62. This means that at current production rates we will extract all the gold in 62 years. People often refer to Bitcoin as digital gold precisely because it also has a high Stock-To-Flow ratio.

In addition, this indicator can be usedto forecast the value of an asset based on total supply and annual production. Trader and analyst @filbfilb noted that the current Bitcoin rate is 15-20% lower than the level predicted by the model.

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