Bitcoin Stock-to-Flow Model
A quantitative model that values Bitcoin based on its scarcity, measuring the ratio of existing supply (stock) to new production (flow). The model suggests that Bitcoin's value increases as it becomes more scarce.
Bitcoin Price vs Stock-to-Flow Model
Historical BTC price compared to the S2F model prediction. Vertical lines indicate halving events.
What is Stock-to-Flow?
The Stock-to-Flow (S2F) model is a way to measure the scarcity of an asset. It's calculated by dividing the total existing supply (stock) by the annual production rate (flow).
S2F = Stock (existing supply) ÷ Flow (annual production)
A higher S2F ratio means the asset is more scarce. For example, gold has an S2F ratio of around 60, meaning it would take 60 years of current production to match the existing stock. After the 2024 halving, Bitcoin's S2F ratio is approximately 121, making it more scarce than gold.
How the Model Works
The S2F model, popularized by analyst PlanB in 2019, suggests that Bitcoin's price is primarily driven by its scarcity. The model has shown a strong correlation with Bitcoin's price throughout its history.
Halving Events
Every 210,000 blocks (~4 years), Bitcoin's block reward is cut in half, reducing the flow and increasing the S2F ratio, which historically has led to price increases.
Scarcity Value
As Bitcoin becomes more scarce (higher S2F), the model predicts exponential price growth, following a power law relationship: Price ∝ S2F³