The «stock to flow» theory indicates that the lower the issuance and provision of the cryptocurrency, to that extent, the higher the price of the currency or asset in the market. The theory is the same one that predicted and was correct about the performance of the cryptocurrency after the Halvings of 2012 and 2016. That is why the profile of the analyst «planB» (anonymous analyst who developed the stock and flow model for Bitcoin), believes that the cost of Bitcoin will face a wave of appreciation after the sixth month after Halving 2020, of course, following the famous stock to flow (S2FX) model, which “estimates” an even higher future price for this cryptocurrency.

The stock to flow model

Stock to flow (S2F), was created by the analyst who calls himself «planB», originally published in March 2019, and aims to review the relationship between the production of supply and currently available stocks, performs Value calculations based on the supply of new Bitcoins that come into circulation through mining, compared to the existing supply (stock).

Each Bitcoin issue is halved once a Halving occurs, it is known that the event increases the price of assets in the following months after the reduction of the reward. This model was considered a theory of great importance in the cryptocurrency market, since the growth of Bitcoin can be scaled every time a Halving occurs, which is an event that reduces the reward to miners and that is usually repeated every four years, until the year 2140.

It is the same theory that the analyst planB used to elaborate a forecast for Bitcoin in 2020, and it has worked to put the price after the Halvings carried out in the years 2012 and 2016. Taking into account the study presented by the said analyst, the Bitcoin would rise in price from the month of November 2020.

PlanB analyst anonymity

Although the PlanB analyst has had some successes in the past, it must be taken into account that it is the personal opinion of an anonymous individual. Although anonymity is common in other business areas, where some internal people of a company or organization use “pseudonyms” to make leaks (since they are not legally authorized to make this type of announcement), from a certain point of view it can be understood the use of pseudonyms in these cases since there is a “labor or contractual link” between the person who made the leak (or proposes a theory) and the company or government for which they work, however in the case of Bitcoin (which is decentralized and it does not depend on a company or government) it would not be necessary to use a pseudonym or anonymity to share certain ideas, theories or estimates, for which reason you must be very judicious and careful when following these types of projections.

What do you think about this topic? What do you think about Bitcoin’s stock-flow model?

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Image by Dmitri Demidko via under creative commons license.

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