Bitcoin Stock-to-Flow Model Explained
Bitcoin's supply is fixed at 21 million coins. Every four years, the rate of new coin production is cut in half — a process called halving. The Stock-to-Flow model turns this simple fact into a price prediction tool.
What Is Stock-to-Flow?
Stock-to-Flow (S2F) is a ratio that measures scarcity. It compares the existing supply ("stock") to the annual rate of new production ("flow").
Formula: S2F = Stock ÷ Flow
For Bitcoin today:
- Stock: ~19.8 million BTC in circulation
- Flow: ~165,000 BTC mined per year (post-2024 halving)
- S2F ratio: ~120
A high S2F ratio means the asset is scarce. Gold has an S2F of about 60. Bitcoin's S2F already exceeds gold — and doubles again after each halving.
Who Created the S2F Model?
The Bitcoin S2F model was created in 2019 by an anonymous analyst known as PlanB (@100trillionUSD). PlanB observed that gold and silver — both scarce commodities — command high prices largely because of their high S2F ratios.
PlanB applied this logic to Bitcoin. He found a strong statistical correlation between Bitcoin's S2F ratio and its market price.
How Halvings Affect S2F
Bitcoin halvings occur approximately every four years. Each halving cuts the block reward in half, reducing the flow of new Bitcoin entering circulation.
| Halving | Year | Block Reward | Approx. S2F |
|---|---|---|---|
| Genesis | 2009 | 50 BTC | ~1 |
| 1st | 2012 | 25 BTC | ~7 |
| 2nd | 2016 | 12.5 BTC | ~25 |
| 3rd | 2020 | 6.25 BTC | ~56 |
| 4th | 2024 | 3.125 BTC | ~120 |
| 5th | 2028 | 1.5625 BTC | ~240+ |
Each halving roughly doubles the S2F ratio. The model predicts that each doubling corresponds to a significant price increase.
S2F vs. Power Law Model
Both models predict long-term Bitcoin price growth. They differ in what they measure.
| Feature | Stock-to-Flow | Power Law |
|---|---|---|
| Basis | Scarcity ratio | Time-price relationship |
| Key driver | Halvings | Time elapsed since genesis |
| Growth pattern | Step-function jumps | Smooth deceleration |
| Demand | Not included | Not included |
| Track record | Mixed post-2021 | More consistent overall |
The Power Law model has been more consistent in tracking Bitcoin's actual price corridor over full market cycles. S2F predicts higher prices in the short term following halvings.
Criticisms of the S2F Model
- Demand is ignored: A scarce asset with no buyers is still worthless. S2F only models supply.
- Post-2021 performance: Bitcoin's price in 2022 fell well below S2F model predictions.
- Correlation vs. causation: A strong historical fit does not guarantee future performance.
Why Scarcity Still Matters
Despite its limitations, the S2F model highlights one key insight: Bitcoin's issuance is mathematically predictable. Unlike central bank currencies, no government can print more Bitcoin.
This predictable scarcity is a fundamental property that distinguishes Bitcoin from every other monetary asset in history. Even if the exact S2F price targets prove wrong, the underlying scarcity argument remains compelling.
Use the S2F model projections in our Bitcoin Retirement Calculator to see how this scarcity trajectory could affect your path to financial freedom. Explore live S2F data on the Stock-to-Flow Calculator page.
Disclaimer: This article is for educational purposes only. The S2F model is speculative. Past performance does not guarantee future results. Never invest more than you can afford to lose.
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