The ‘Stock-to-flow’ is a number that shows how many years, at the current production rate, are required to achieve the current stock. The higher the number gets, the price is also Higher.
The S2F model creator, PlanB has said that he has no doubt that Bitcoin will hit $100K – $288K before December 2021. This is exciting. PlanB officially wrote this statement on his Twitter.
If Bitcoin hits that price in 2021 somehow, Its global market cap would be around 2$ Trillion. That is damn huge! It’s nearly the same as Apple’s market cap which is the most valuable company in the world.
And the price increment of Bitcoin would be 545% from the current price. But the fact is, It is so tiny compared to Bitcoin’s initial increment. However, S2F model values are mostly about Bitcoin halving, supply data, and expectations.
In other words, those are not financial advices!
6 months ago, Bitcoin has faced its 3rd halving which cut off block reward from 12.5BTC to 6.25BTC. This refers to Bitcoin halving cut down 50% of miner’s reward each day.
This is not only reducing the miner’s reward. it also slows down circulation supply gain on the Bitcoin market. Both of these facts directly depend on the price of each Bitcoin.
The perfect example to examine this, BTC prices reached from 9,000$ to 15,000$ within 6 months. While the last halving also on 6 months ago.
As the Bitcoin supply decreases over time, and the Bitcoin market inflation would rise drastically. This is also the theory behind the S2F model.