Hello!
For those who live under a rock and are not familiar with the Stock-to-Flow model from @100trillionUSD, I will try to explain it first and then discuss if it is right or not from my point of view.
First we should define what is STOCK:
Stock is the size of the existing stockpiles or reserves.
And then FLOW:
Flow is the yearly production
With this 2 definitions we can define the STOCK TO FLOW by the ratio between the Stock divided by the Flow (yearly production). @100trillionUSD did the following calculations for the precious metals and the numbers looked like that:
With all this considerations in mind he draw the Bitcoin Stock-to-Flow model (S2F) with their value and expected value over time. He also added colors showing the months until next halving. With this information is really easy to see what are the effects of the Bitcoin halvings over time.
Actually the graph looks like this:
As you can see, the predicted price for Bitcoin after the last 2020 halving is almost 100.000$. On their 2019 article the model predicted a price of 55.000$. Note that the graph is logarithmic and some lines can mislead you, like this one.
Conclusions
I think that this model is based on a really easy principle. The principle that the new yearly supply of an asset have a direct effect on its price.
It also supports that the price of the asset tend to reflect this ratio over time, maybe in a short timeframe can be quite different but in the long run it follows.
On a general basis I agree with that, I think this model is one of the best to follow out there. I am still thinking that there can be major influences that are not considered in this model, such as macroeconomic events like the Coronavirus crisis, actions taken by the government, etc.
If this time it is shown again that the prices are correlated with this model, we will be able to confirm that this model is 100% acurate. I will be patient until the next cycle is confirmed.
Enjoy! π