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My Two Sats: How robust is the Stock-to-Flow model?

The Stock-to-Flow model in the Bitcoin-world-high waves. Probably not least because of its bullish price Outlook: In the course of the next few Halvings of Bitc

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My Two Sats: How robust is the Stock-to-Flow model?

The Stock-to-Flow model in the Bitcoin-world-high waves. Probably not least because of its bullish price Outlook: In the course of the next few Halvings of Bitcoin is to rock climbing course on the 100,000 U.S. dollars. But how reliable is the price Outlook?

About the efficient market hypothesis and why the Halvings are not priced in.

15. November 2019 BTC $ 8,544.70 0.56% part Facebook Twitter LinkedIn xing mail

With rate forecasts, there is such a thing too Often, bullish expectations are based more on their own hopes and desires than on a reliable, quantitative methodology. Unforgettable is about John McAfee's crystal ball forecast of one Million US dollars per BTC by the end of 2020. A quick look at suspect: Currently, the crypto-currency no 1 is located about 93 percent behind the projected rate – if you assume a uniform rate of growth.

The Stock-to-Flow-model

McAfee's forecast falls in line with countless predictions that seem to be more or less out of thin air. But there are exceptions.

A rate model, since its publication on 22. March of this year, creates vortices in the BTC Community, is the Stock-to-Flow-model (S2F) of PlanB. In PlanB is a pseudonym of global financial analysts, working to their own statements, according to a hedge Fund. He sits in the saddle of the traditional financial sector.

What is the S2F model makes it so special is its mathematical precision with which it models the Bitcoin rate. PlanB, in his article, the hypothesis that the prices of monetary goods correlate with their Stock-to-Flow-Rate. In S2F, it is the ratio between existing Supply and upcoming supply of money, the Flow. The larger the capital stock of the Good in relation to the rate of Inflation, the higher the S2F-Rate.

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Gold, for example, has a floor of 185,000 tonnes and an annual increase of 3,000 tons, which leads to an inflation rate of 1.6 per cent, as well as a S2F-ratio of 62. In other words: According to the latest Figures, it would take 62 years to double the present stock of gold reserves. This makes Gold a rare and thus valuable Good.

bitcoin's current Circulation is about 18 million Coins. Every year (according to the current state of monetary policy), there are approximately 675.000 BTC. This results in a S2F-Rate of 27 is obtained.

The Interesting thing about PlanBs model is that, in fact, a statistical relationship between the price of a Good and the amount of the S2F-Rate can be observed: the higher the S2F-Rate, the higher the price of the Good.


the actual history of the Bitcoin price over the modelled S2F-Course, resulting in a hard-to-miss statistical connection. In mathematical terms, the relationship leads to a coefficient of determination of 95 percent. In short, we can say that "the probability that the ratio between SF and the market value is caused by random, is close to Zero", so PlanB in his article.

And here is the crux of the matter is that You can keep track forecasts what you want. That the price of Bitcoin is in the past in relation to its scarcity, is beyond doubt. The model has validity, the BayernLB confirmed.

Bitcoin soon at 100,000 US dollars?

to Knit the S2F model, the result is exorbitant price forecasts. From may 2020, the model predicts a BTC price of $ 100,000, from the following Halving 2024 it is expected to reach a Million dollars. In other words: Bitcoin is becoming scarcer and therefore more expensive. If you like, you can follow the S2F-Course on .

the accuracy of The linear modeling of the BTC-rate is amazing. To is of writing, the price at the time 8.623 US Dollar, and is only slightly higher than the S2F-previously held 8,354 US$) say (.

Halving advance

So it is really exciting, however, in may 2020. Finally, the inflation rate of crypto-currency no 1 is halved then, what the S2F-Rate is doubled. In the past a tenfold increase in the Bitcoin price following every Halving but with a certain delay.

market observers't have to guess, however, why the Knowledge of the upcoming Halvings beats in the share price. In the jargon, one speaks of the Pricing information available. It is in the nature of Open-Source Software such as Bitcoin that it is accessible and transparent. Investors will be able to look back on the experiences from the last two Halvings, and similarly bullish expectations for the upcoming Halving of the participants. Rational speculators are likely to the current BTC rate, so as an extremely cheap feel, compared with what comes after 2020 and generous capital to invest. This, in turn, would have already been in advance of price movements upwards.

this is ten years after bitcoin's Launch, not watch. The Halvings still seem to be only after the Trigger to be subject to significant negative lead; and, although they are predictable. What is the reason?

The Problem with the efficient market hypothesis

Whether the S2F model is really suitable for, anticipate developments of the future rate, it will show the next half of the Coinbase Rewards. Critics of the model emphasize the above-described connection, If the S2F model really is true, and BTC is demonstrably undervalued, then the forecast is included already in the price. The conclusion is a bit circular, but the criticism is quite serious. So: priced in or not?

The so-called efficient market hypothesis (EMH) says that the market reflects all available information about a Good in the price. The current price value, is a kind of "Fair Value", speculation is, therefore, to generate gains from under-valued Assets, according to the EMH, therefore, not possible.

however, the question of whether the EMH is on Bitcoin apply. Finally, PlanB has shown that the connection between the S2F and the BTC price already since the early days of the Kryptowähto watch of no. 1 is. OGs like Trace Mayer, for example, have already referred to the 2015 on it.

retrospectively considered, one might say, therefore, that the model of the EMH contradicts. Finally, a rational actor could very well conclude that BTC was valued at any point in time X in the past, and act accordingly. This leads to the conclusion that the next Halving praises even today, and the price moves after may of 2020, in fact, to the top.

Know about bitcoin Halvings, and the S2F-model should simply be not very widespread. Bitcoiners have a kind of insider knowledge, due to which you speculative gains can exploit. The more liquid the markets are likely to be more difficult to profitable yield, however. Finally, markets with growing size, as a rule, be more effective and efficient.

Nevertheless, A guarantee for future Bitcoin prices, the Stock-to-Flow model does not deliver.


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