Topic: Stock-to-Flow Model: Modeling Bitcoin's Value with Scarcity - page 6. (Read 5726 times)

Also i think that bitcoin does not fit in stock to flow model. Although Stock-to-Flow Model is applied on assets which have scarcity but i don't think bitcoin could follow this model because it is different in nature and also the demand of bitcoin is way too high. Bitcoin will rise much higher as predicted by S2F model.

i find it real funny

most of the math that make up 'stock to flow' metric is averaging a yearly price. .. of averaging a 10 day price
so when seeing the yearly average price line and then saying 'oh look there is a relationship to daily price'... OF COURSE THERE IS
the average is definitely going to be within a 5% deviation.. because the price is only on average 10% volatile (5%up or 5% down)


stock to flow is not predicting anything. its just reformatting a price into a new line thats not the daily price but an averaged price.. so yes ofcourse the line would be within limits of the daily price

if you use a true coin generation/circulation metric. that does not include a price average or any math including the price.. and then set that against the price.. then you wont see the same pattern or correlation

the reason for the S2F correlation vs daily price has nothing to do with coin generation/circulation amounts. and everything to do with the 'average price' math they added into the metric

The correlation coefficient of the S2F model with underlying bitcoin price is north of 95%.
This means that every other factor influencing bitcoin has the power of explaining the residual 5%.
So you surely can adapt the model to take into account demand, mining hash power, institutional adoption, UTXO chain analysis, CSW claims, but all those factors, that are extremely difficult to factor in a model, would add only a tiny fraction of explaining power.

In addition remember that factors that could affect the price,m right not be taken into account on a model. Take the Black and Scholes model, where demand is not taken into account to determine the price of a derivative.

You mentioned several macro factors, current events and even public sentiment, but one of the aspects of stock to flow remains that it is NOT really accounting for the various factors that you mentioned, including that some peeps have criticized stock to flow by asserting that it fails to account for a variety of factors, including demand.. and it kind presumes steady demand.   I think that in the end, stock to flow is going to prove correct because it seems to largely be identifying the most important factors of bitcoin that likely drive bitcoin's ongoing price appreciation and dynamics and kind of shows why the honey badger does not seem to give a damn - meaning it does what it does in spite of a lot of factors that people try to measure and who either fail/refuse to account for factors that stock to flow emphasizes and largely seem to be what is actually driving bitcoin's price.

I don't believe in his S2F model TBVH but yeah, I can say that it's quite impressive here to see so many charts about the same and like LUCKMCFLY said, S2F has answers to almost everything but not the worst possibilities that may take place once the need of humans arise after a steep rise in inflation that's definitely going to take place considering the current amount of deaths taking place and evolving Coronavirus and its increasing number globally. This is such naturally (dead yet) powerful thing that can't be ignored and for the same, people will definitely want money to survive and for that, they'll try to FOMO sell after seeing a 27% dump in a day. I'm not bearish on BTC, but everyone here forgot a fact that BTC has gone dead a lot of times and it can again die till an area nobody would have thought of, before rising up again as a new Dawn. At that time, this S2F model will become valid again but I believe that things are going to change this time.

One of the things that I like the most about the S2F model is that it has the answers to everything, for now the market is going through a correction, some think that it can reach almost 35% of the correction, so far it is 25%, But one of the last publications that I have read, for this 2021 there is still more to go in a bullish sense:

This Was Not the Top of Bitcoin’s 2021 Bull Run, According to PlanB



Source: https://cryptopotato.com/this-was-not-the-top-of-bitcoins-2021-bull-run-according-to-planb/

The best thing about all this is that it is very possible to see the price of Bitcoin at $ 288k, everything points to it.

Frequently, I have stated that the considerations of the stock to flow model need to try to retain a decent amount of flexibility in terms of how much BTC's actual price performance needs to be allowed to deviate from the predictions and still be allowed to have predictive value because the model surely seems to be striving to achieve predictions based on data (data-driven)..

So, sometimes it seems that even PlanB communicates in ways that are too locked in and seems to get caught up on what the model had previously stated rather than whether there might be deviations from the model that would justify tweaking it and continuing to allow it to be data driven and merely a guide rather than some kind of sorcery.. which I get a bit hostile when anyone is trying to be a sorcerer or to suggest that some model that they have retains some level of sorcery status.. even though we certainly can recognize that some models are much better than others, and the stock to flow model does seem to be amongst the best (currently and based on current data that we have).

First time I read your topic about PlanB and stock-to-flow, I really though it's way too optimistic (I am usually a bit cautious about BTC predictions, some would say even too much) but looking it at the current situation where market  follows it, gets me really excited. Even I started thinking that $1 million by 2025 is possible.

Anyway, just saw a PlanB tweet where he is even relieved by this last correction. Looks like BTC pumping the eay it did so far was too much even for him


https://twitter.com/100trillionUSD/status/1385496730200907776

A good model is one that is capable to forecast the future.
Well, according to this tweet of PlanB, S2F is one of those models, as the "out of sample" points, or the points NOT used to calibrate the model, are well forecasted by the "in sample" points


https://twitter.com/100trillionUSD/status/1380456734725173248?s=20

The blue dots are the monthly data used to calibrate the model. The red ones are the ones realised after the original model has been published.
They follow the model white line like a clockwork!

Bitcoin’s stock-to-flow ratio increased drastically in May 2020 - after the last halving. By contrast, gold’s stock-to-flow ratio was only insignificantly higher last May. If the May 2020 stock-to-flow ratio for Bitcoin was factored correctly into the model, a vertiginous price of $90K is yet to be explored.
Hold on.

It is important to note, from time to time, that a variety of shitcoins, whether we are referring to sushi or some of piece of crap scam project, may well engage in a variety of tactics to attempt to imitate bitcoin and some of its features, and part of their appeal for some folks is that they are not able to determine the various differences between shitcoin 1, shitcoin 2, shitcoin 3 and bitcoin, so really those various shitcoins deserve to be analyzed in some other thread, and sure they might try to apply stock to flow modelling and a variety of factors, and perhaps in the end there might be some shitcoins that might stand up to scrutiny, including live tests with the passage of time (though I doubt it), and in the end, likely ONLY one or two differences or even testing out how the various shitcoins play out with a bit of load upon them in the real world will end up showing that they are lacking, whether it is scaling, or lack of transparency, or lacking in various kinds of network effects such as distributed mining or distributed development or liquidation avenues.. ...so fuck the premature (misleading) attempts at trying to draw parallels between various shitcoins and bitcoin in these kinds of threads, and take those analysis attempts, to the extent that they are genuine at all, and play them out for a year or two (minimum) and then maybe at some point, there could (perhaps?  I doubt it) be some abilities to hold them up to some of the bitcoin features, characteristics, built -n incentives and/or price dynamics.

Indeed there is difference.
Diamonds are not scarce, their scarcity is artificial, as the only provider is hoarding all of them in their caveaux.
This is artificial scarcity, as supply is constrained artificially.
This could well be reversed at once, if De Beers change their mind.
Bitcoin scarcity is coded in the algorithm, and secured by network nodes.

I think that mining happens because of demand and whether or not any altcoin with a deflation pattern will increase in value.
Sushi is a token but it is mined through being taken out of exchanges and locked to continue making Sushi. Sushi mining becomes more difficult because its algorithm reduces the amount of Sushi tokens generated over time.

The value of Bitcoin, gold or silver increases as they are stored and taken out of exchanges.  So I don't think it makes any difference in terms of how scarcity is created.

Nah, as I stated in OP this model do not apply to shit coins (or shit tokens).
Sushi being taken off the exchanges has nothing to do with scarcity. It might be about demand and supply, but this doesn't mean sushi is scarce at all.  So I can't even understand why it is relevant here.

He can that all that he wants for what it is worth. If PlanB continues to work and follow the model as intended who are we not to pay tribute to the 100trillionUSD man?
My only concern, I have expressed earlier on, still haunts me a bit but I guess I am overthinking it too much.
Keep calm and carry on.

Bitcoin's Stock-to-FLow model is awesome and it's being used very well by Sushi. There is less Sushi in exchanges over time because they have stakes in liquidity pools. Bitcoin's deflationary model has brought success to Bitcoin as its value continues to increase over time.

PlanB is taking pride in his model working flawlessy month after month.




https://twitter.com/100trillionUSD/status/1367065337246715904?s=20

The blue dots were known at the time of publishing his first article
The red dots came after it.
The model is confirmed working.
No big surprises here as the model has been working since 2011, well before the first halving.

I feel kind of tricked now I supposed the model was consistent all along... or maybe I failed to get its logic in the first place (which is also absolutely possible).
Thanks for the clarification as I could not understand how to relate those two graphs into the same context.

I think they are referring to the 10 days lag model.
Of course, imagining the price adjusting for the new S2F in 10 days only, I think is a little bit optimistic. So better to consider the slower 463 days (updated from the 365 days on the graph).

Anyway, yes, bear in mind that picking too old messages can get you on different versions of this model.

Yeah, I know what you were referring to, sometimes I like to make stupid jokes 
By the way, I found the pinned message of Digitalik.net https://twitter.com/digitalikNet/status/1210251305568161794 and I fail to get why it says it predicted 90k in 2020.
Was the model changed at some point? It looks different now, have I missed something.
I know these are only predictions but I want to understand the logic behind (see image below)