Bitcoin's Stock to flow model seems accurate !

drlukacs

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Quote from: Thavash on August 07, 2020, 01:43:37 PM

Basically, this measures the total supply of a commodity versus the expected incoming supply , and it could indicate the value of the commodity. It was found by some people a few years back that it seems to be tracking the price of Bitcoin fairly well ! Whats your view , does this prove that $100k and later on $1M are feasible ?

This is a financial game and there are a lot of coins for us to buy, bitcoin is not coin. That's my opinion, because we have so many good altcoins like ETH, Chainlink, Tezos, BAND, ... so why does bitcoin's supply make its price so high?
This is ridiculous, the whales will not be easy for us to make so much money. they will gradually change trends and sometimes bitcoin is not important over the years to come. it is possible that bitcoin will only hit $ 20k again, but not increase further.

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Quote from: drlukacs on August 13, 2020, 03:53:31 AM

Quote from: Thavash on August 07, 2020, 01:43:37 PM

Basically, this measures the total supply of a commodity versus the expected incoming supply , and it could indicate the value of the commodity. It was found by some people a few years back that it seems to be tracking the price of Bitcoin fairly well ! Whats your view , does this prove that $100k and later on $1M are feasible ?

This is a financial game and there are a lot of coins for us to buy, bitcoin is not coin. That's my opinion, because we have so many good altcoins like ETH, Chainlink, Tezos, BAND, ... so why does bitcoin's supply make its price so high?
This is ridiculous, the whales will not be easy for us to make so much money. they will gradually change trends and sometimes bitcoin is not important over the years to come. it is possible that bitcoin will only hit $ 20k again, but not increase further.

Quoted for future reference. The cringe will be powerful when reading these liens in the future.
Stock to Flow is not applicable to shitcoins as there is not unforgeable scarcity for them (actually there is not even scarcity for ETH, whose total supply is unknown to the most).

fillippone

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Quote from: exstasie on August 13, 2020, 02:08:26 AM

<...>
However, I don't see why that would break the long term regression model stock-to-flow is based on, which accounts for significant fluctuations from the mean. Temporary deviations from the trend are normal.

This.
S2F models are not meant to be used for trading, and price can, for many reasons that account for the residual 5% of price of bitcoin, deviate largely, but temporary, from predicted price. Trading has a time horizon, be it intraday, daily, or weekly, that is not compatible with the model time-frame, which has months as unit of measure.

This model is meant to be used for investment, and helping discovering the true value proposition of bitcoin.
Of course the co-integration of the model is going to break sooner or later, but until then, the guideline of the model price can be taken as valid.

exstasie

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Quote from: el kaka22 on August 12, 2020, 11:16:07 AM

Obviously speaking there is some value to stock to flow model, nobody could deny the fact that bitcoin doesn't follow the method, however we should not forget the big difference between bitcoin and all the other investments, in bitcoin some rich dude could sell 100k bitcoins all at one night, rare occasion that basically happens maybe once every few years, but it is totally possible, or some super rich dude could buy 250 million dollars worth of bitcoin as well, rarely happens again, but still could happen.

When those unexpected and rare things happen that means bitcoin could get out of the model and could reach to places we never imagined it could, do you think 20k was actually in the charts? Nobody could have guessed something like that but it did happen, think of it like that.

A single whale selling huge lots on spot exchanges will cause an aberration on the charts. It could even trigger a mid-term downtrend. The November 2018 crash comes to mind.

However, I don't see why that would break the long term regression model stock-to-flow is based on, which accounts for significant fluctuations from the mean. Temporary deviations from the trend are normal.

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Obviously speaking there is some value to stock to flow model, nobody could deny the fact that bitcoin doesn't follow the method, however we should not forget the big difference between bitcoin and all the other investments, in bitcoin some rich dude could sell 100k bitcoins all at one night, rare occasion that basically happens maybe once every few years, but it is totally possible, or some super rich dude could buy 250 million dollars worth of bitcoin as well, rarely happens again, but still could happen.

When those unexpected and rare things happen that means bitcoin could get out of the model and could reach to places we never imagined it could, do you think 20k was actually in the charts? Nobody could have guessed something like that but it did happen, think of it like that.

Thavash

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Quote from: fillippone on August 11, 2020, 08:36:09 AM

Quote from: exstasie on August 10, 2020, 04:59:09 AM

Quote from: hatshepsut93 on August 09, 2020, 05:44:52 PM

These are not new questions, nor you are the first asking them.
So these points were addressed many times, even by PlanB himself.
You can find answers here: Stock-to-Flow Model: Modeling Bitcoin's Value with Scarcity

Spoiler alert:the answer to both questions is YES.

Thats a great post - thanks

exstasie

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Quote from: fillippone on August 11, 2020, 08:36:09 AM

Quote from: exstasie on August 10, 2020, 04:59:09 AM

Quote from: hatshepsut93 on August 09, 2020, 05:44:52 PM

You can't make any sort of good long-term prediction while completely ignoring demand. Stock to flow model only takes supply, it assumes that demand is constant, but it won't be. It can explode or it can decrease. In the future the rate of new people buying Bitcoin will definitely change. A negative scenario would happen if everyone will be aware of Bitcoin but no one will be interested. A positive scenario is a mass adoption based on fundamentals rather than speculation.

To me, it has more value as a trend or regression model, not as some theory about fundamental valuation. Is the trend holding? Does the model correlate to price? If the answer to those questions is yes, then stock-to-flow is of interest to me.

These are not new questions, nor you are the first asking them.
So these points were addressed many times, even by PlanB himself.
You can find answers here: Stock-to-Flow Model: Modeling Bitcoin's Value with Scarcity

Spoiler alert:the answer to both questions is YES.

That was already obvious enough to me from chart analysis. I wasn't actually asking those questions. I was using them to explain why the model holds value.

If stock-to-flow were just a theory about the fundamentals underlying BTC price, I would have zero interest in it.

Reatim

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Quote from: hatshepsut93 on August 09, 2020, 05:44:52 PM

You can't make any sort of good long-term prediction while completely ignoring demand. Stock to flow model only takes supply, it assumes that demand is constant, but it won't be. It can explode or it can decrease. In the future the rate of new people buying Bitcoin will definitely change. A negative scenario would happen if everyone will be aware of Bitcoin but no one will be interested. A positive scenario is a mass adoption based on fundamentals rather than speculation.

That exactly how things will be, if there's real adoptions demands will be needed and the value will comes up and start to pumped.

but if there's none, and everything based alone with speculation won't be supported by much bigger investors communities.

There's should be a very good reason in order to get continuous support from old and new investors, money will flows if there are adoptions
that will use this system.

fillippone

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Quote from: exstasie on August 10, 2020, 04:59:09 AM

Quote from: hatshepsut93 on August 09, 2020, 05:44:52 PM

You can't make any sort of good long-term prediction while completely ignoring demand. Stock to flow model only takes supply, it assumes that demand is constant, but it won't be. It can explode or it can decrease. In the future the rate of new people buying Bitcoin will definitely change. A negative scenario would happen if everyone will be aware of Bitcoin but no one will be interested. A positive scenario is a mass adoption based on fundamentals rather than speculation.

To me, it has more value as a trend or regression model, not as some theory about fundamental valuation. Is the trend holding? Does the model correlate to price? If the answer to those questions is yes, then stock-to-flow is of interest to me.

These are not new questions, nor you are the first asking them.
So these points were addressed many times, even by PlanB himself.
You can find answers here: Stock-to-Flow Model: Modeling Bitcoin's Value with Scarcity

Spoiler alert:the answer to both questions is YES.

tbterryboy

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Plus it doesn't only happen during bubbles, it does also happen when market is in recovery mode. We had a horrible few months and everyone was doing bad, right now it is not recovered yet, however it is at least doing better and it is getting better, it is nowhere near what it was but it will get there and it will reach above as well, that is how economy works, it grows bigger and bigger all the time.

So, eventually we are talking about bitcoin going up over time because market is in recovery, it will take time and it will be a long period of time before it can be as good as it used to be but we will definitely see higher numbers for sure. Hopefully we will get to see that in few years and can go above $20k once again and double our profits, but I am willing to give a longer period of time as well.

exstasie

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Quote from: hatshepsut93 on August 09, 2020, 05:44:52 PM

You can't make any sort of good long-term prediction while completely ignoring demand. Stock to flow model only takes supply, it assumes that demand is constant, but it won't be. It can explode or it can decrease. In the future the rate of new people buying Bitcoin will definitely change. A negative scenario would happen if everyone will be aware of Bitcoin but no one will be interested. A positive scenario is a mass adoption based on fundamentals rather than speculation.

To me, it has more value as a trend or regression model, not as some theory about fundamental valuation. Is the trend holding? Does the model correlate to price? If the answer to those questions is yes, then stock-to-flow is of interest to me.

fillippone

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Quote from: hatshepsut93 on August 09, 2020, 05:44:52 PM

You can't make any sort of good long-term prediction while completely ignoring demand. Stock to flow model only takes supply, it assumes that demand is constant, but it won't be. It can explode or it can decrease. In the future the rate of new people buying Bitcoin will definitely change. A negative scenario would happen if everyone will be aware of Bitcoin but no one will be interested. A positive scenario is a mass adoption based on fundamentals rather than speculation.

Yes you can. Two reason:

Demand is not factored in many models. For example in the Black&Scholes mode, demand is not factored in, as the model is based on other (non-arbitrage) assumption. This is to demonstrate that models not taking demand as an input are perfectly accettabile.
This particular model could factor demand in. But R^2 is already 95%. Demand, togheter with all other factor, count for 5% of the value. Are you sure it is worth to do so?

hatshepsut93

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You can't make any sort of good long-term prediction while completely ignoring demand. Stock to flow model only takes supply, it assumes that demand is constant, but it won't be. It can explode or it can decrease. In the future the rate of new people buying Bitcoin will definitely change. A negative scenario would happen if everyone will be aware of Bitcoin but no one will be interested. A positive scenario is a mass adoption based on fundamentals rather than speculation.

fillippone

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Quote from: exstasie on August 09, 2020, 06:21:08 AM

Quote from: Lucius on August 08, 2020, 10:44:03 AM

Quote from: exstasie on August 08, 2020, 05:58:19 AM

Never underestimate the craziness of a bubble. Years from now, I honestly think 2017 may turn out to be on the tame end of Bitcoin's historical bubbles.
Time will tell, but I think most people are still greatly underestimating Bitcoin's potential. Even the bulls.

If we are talking exclusively about the value of BTC compared to fiat, then I agree that many still consider it impossible to repeat something similar to 2017. Of course, such defend the theory that it is not the same to reach a growth of 20 times from the starting point of $1000, and let's say the same from the starting point of $10 000 - but it's really just about the amount of money that will enter the BTC market over a period of time.

It's not just about the inflow of money (demand). It's also about the willingness of BTC holders to sell, or lack thereof (supply). When the entire market is collectively refusing to sell (and this is what happens during bubbles) then it takes very little volume to reach extreme valuations.

I think you are both correct. But while @extasie was focusing on the short term effect, where demand-offer imbalances can drive market price into the bubble territory (like the obvious bubble we observed in December 2017), @lucius was focusing on the long term grind the bitcoin price needs for Bitcoin to be recognised as the definitive Store Of Value. The multimillionaire valuation can be obtained in bitcoin (disregarding then the debasement of the dollar) of money flow from other, imperfect, Store of Value: equities, bonds, gold, real estate.

exstasie

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Quote from: Lucius on August 08, 2020, 10:44:03 AM

Quote from: exstasie on August 08, 2020, 05:58:19 AM

Never underestimate the craziness of a bubble. Years from now, I honestly think 2017 may turn out to be on the tame end of Bitcoin's historical bubbles.
Time will tell, but I think most people are still greatly underestimating Bitcoin's potential. Even the bulls.

If we are talking exclusively about the value of BTC compared to fiat, then I agree that many still consider it impossible to repeat something similar to 2017. Of course, such defend the theory that it is not the same to reach a growth of 20 times from the starting point of $1000, and let's say the same from the starting point of $10 000 - but it's really just about the amount of money that will enter the BTC market over a period of time.

It's not just about the inflow of money (demand). It's also about the willingness of BTC holders to sell, or lack thereof (supply). When the entire market is collectively refusing to sell (and this is what happens during bubbles) then it takes very little volume to reach extreme valuations.

fillippone

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Quote from: exstasie on August 08, 2020, 05:58:19 AM

Quote from: Thavash on August 07, 2020, 01:43:37 PM

Whats your view , does this prove that $100k and later on $1M are feasible ?

Proof? No.

Is it an interesting theory with some merit? Yes.

Quote from: jossiel on August 07, 2020, 06:37:24 PM

$100k is high yet feasible but $1M, forget it for now.

Why? It's just a measly 10x above $100K.

Right. But BTC/USD is a ratio, so we can get to 1,000,000 BTC/USD not only with BTC appreciating, but also with USD losing value. I see both of those two happening in the future: this means that when BTC hits 1 million dollar, 1 gallon of milk (whatever a gallon is, I am Italian and used to the IS) will cost 100 USD... as simple as that: for the node not to break, the USD must break.

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Well, in bitcoin world what you can only provide an assumption and assumption to hit 100k "technically possible" is the only thing you can say. You can't just go out and say "bitcoin will be 100k and no doubt about that", that would be stupid because we are talking about something that we have no control over (well if you are mega rich you might) and that is why I think the best thing you can do is to show that it "may" reach 100k and it is feasible.

Same right now for me as well, I believe bitcoin will definitely reach above 30k, but I do not say that, I say "bitcoin may reach 30k" and that is the way I word it. If you see anyone that says "will" instead of "may" they are just trying to get your attention, they are just not that intuitive to know what will happen in the future.

YuginKadoya

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It looks accurate in my opinion, but as long as no one really knows about the future it will still fall down to the category of speculation, we all want that to happen and we are all looking into things that gets our hopes up and as for you this is your hope in Bitcoin be really getting there,

I think this can be a great source of relief because as Bitcoin price now there is a large chance it will happen in the near future, my opinion will be 100k feasible but regarding beyond that price boundary, it will be very hard to tell in the future.

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Quote from: exstasie on August 08, 2020, 05:58:19 AM

Never underestimate the craziness of a bubble. Years from now, I honestly think 2017 may turn out to be on the tame end of Bitcoin's historical bubbles.
Time will tell, but I think most people are still greatly underestimating Bitcoin's potential. Even the bulls.

If we are talking exclusively about the value of BTC compared to fiat, then I agree that many still consider it impossible to repeat something similar to 2017. Of course, such defend the theory that it is not the same to reach a growth of 20 times from the starting point of $1000, and let's say the same from the starting point of $10 000 - but it's really just about the amount of money that will enter the BTC market over a period of time.

I don't think we'll have to wait too long to test stock to flow model, some things will become clearer as early as next year - if the model has proven to be quite accurate so far, then we can rightly hope that it can be so in the future.

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Quote from: exstasie on August 08, 2020, 05:58:19 AM

Quote from: jossiel on August 07, 2020, 06:37:24 PM

$100k is high yet feasible but $1M, forget it for now.

Why? It's just a measly 10x above $100K.

Never underestimate the craziness of a bubble. Years from now, I honestly think 2017 may turn out to be on the tame end of Bitcoin's historical bubbles.

Time will tell, but I think most people are still greatly underestimating Bitcoin's potential. Even the bulls.

Yup, time will tell.

But for now, I don't want to go that far but if it accidentally happens and there's another bubble, I hope that I still have one bitcoin my stash by that time.

exstasie

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Quote from: Thavash on August 07, 2020, 01:43:37 PM

Whats your view , does this prove that $100k and later on $1M are feasible ?

Proof? No.

Is it an interesting theory with some merit? Yes.

Quote from: jossiel on August 07, 2020, 06:37:24 PM

$100k is high yet feasible but $1M, forget it for now.

Why? It's just a measly 10x above $100K.

Never underestimate the craziness of a bubble. Years from now, I honestly think 2017 may turn out to be on the tame end of Bitcoin's historical bubbles.

Time will tell, but I think most people are still greatly underestimating Bitcoin's potential. Even the bulls.

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Also to OP, correction, the model you are talking about wasn't made or found by a few guys. It is using some examples from existing commodity, and then as filippone above says, it was just tracked on data points from before 2012. And made by one guy on Twitter called PlanB.

So far accurate does not mean will be accurate:)

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Quote from: cryptomaniac_xxx on August 08, 2020, 02:05:40 AM

Quote from: btc_angela on August 08, 2020, 01:27:20 AM

Yes, currently it really looks accurate, but it is just another prediction model, bitcoin market is very young, we really don't know if this is going to hold true in the coming years.

True, you can use any prediction model I reckon and will still get a 'fairly' good price. I wouldn't say it's a flaw, but bitcoin's market can easily be calibrate because we don't have enough data and with limited data, you can play around with it depending on how you pivot to fit your narrative. So S2F model will fit for now, until it didn't as some point in time.

I really suggest you to read my thread about S2F model. It also assess your point: S2F model calibrated only on pointS before 2012, meaning only points before the first halving, gives pretty “accurate” projection for today prices.

Of course you cannot expect the model to be accurate in two-three halving times: multimillion price prediction means either the model or the US Dollar is going to break.

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Quote from: btc_angela on August 08, 2020, 01:27:20 AM

Yes, currently it really looks accurate, but it is just another prediction model, bitcoin market is very young, we really don't know if this is going to hold true in the coming years.

True, you can use any prediction model I reckon and will still get a 'fairly' good price. I wouldn't say it's a flaw, but bitcoin's market can easily be calibrate because we don't have enough data and with limited data, you can play around with it depending on how you pivot to fit your narrative. So S2F model will fit for now, until it didn't as some point in time.

btc_angela

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There's so much noise lately about the S2F model, @fillippone has a very good thread about it, Stock-to-Flow Model: Modeling Bitcoin's Value with Scarcity.

Yes, currently it really looks accurate, but it is just another prediction model, bitcoin market is very young, we really don't know if this is going to hold true in the coming years.

jossiel

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It only shows the possibility of bitcoin to hit $100k but it doesn't prove that it will actually be there. Treat it as the usual analysis that we have unless it's proven then we say that it has proved to be the exact model what bitcoin has portrayed.

$100k is high yet feasible but $1M, forget it for now.

Thavash

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Hi guys

Some of you have heard of the stock-to-flow model for Bitcoin , if not , you're in for a treat. I made a video discussing it here : https://youtu.be/xa2MtJI0wz4

Basically, this measures the total supply of a commodity versus the expected incoming supply , and it could indicate the value of the commodity. It was found by some people a few years back that it seems to be tracking the price of Bitcoin fairly well ! Whats your view , does this prove that $100k and later on $1M are feasible ?

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