According to PlanB, we are in a bear market. If you have followed the bitcoin space over the last few years then it would be hard to not recognize the name or at least have seen a PlanB post.
Stock to Flow takes the current supply of an asset, the mined bitcoins, and the future expected rate of issuance to give a ratio. Thinking in bitcoin terms, roughly 19M have already been mining with an average annual flow of 328,000 bitcoin issued per year. Keep in mind that increased adoption and growing scarcity will drive value. This gives bitcoin a stock to flow of 57, roughly. For comparison, Gold’s S2F is ~60 with a market capitalization of 10T. Bitcoin’s market capitalization is just below 1T with a S2F roughly equal to gold. This model suggests bitcoin is severely undervalued by the market.
Time to panic or buy the dip?
once the next having occurs (2024), bitcoin will have a S2F of 121. The current price action seems like a bargain.
Not everyone believes in the stock-to-flow model and some don’t take any models seriously at all. Michael Saylor for instance is known for being able to destroy all models. Therefore, don’t base your decisions on any single model. No model can predict the future and you should always consider all sides of the argument and make up your own mind.