The stock to flow model shows Bitcoin’s next price is shocking
Stock to Flow: https://www.lookintobitcoin.com/charts/stock-to-flow-model/
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Today I wanted to talk about the next 6 months of Bitcoin, it’s going to be a very crucial time period because some crazy stuff is going on that I want to explain in this video that will either make or break the story of Bitcoin. In March of 2019, PlanB applied the Stock To Flow Model to Bitcoin. A lot of what this video is is based on his research so all credit goes to him.
What is the stock to flow?
The stock to flow model looks at the stock of Bitcoin, the amount of Bitcoin in existence, and compares it against the flow which is how much Bitcoin is flowing in the system. The reason we’re able to predict the price is because we know exactly how many Bitcoin there are right now in the system, if you go to blockchain.com you’ll see it for yourself – that number is 18.76 million coins.
We also know the flow of Bitcoins into the system because every 210,000 blocks which is roughly every 4 years we get what’s called the halving which is when the block reward for miners gets cut in half. The next one will happen in 2024.
The math behind it:
Let’s use gold as a simple example. Right now the stock of Gold is 185,000 tons, that is how much gold there is in the whole world, that’s a rough estimate. The flow of gold is around 3,000 tons. That is how much gold we find every single year, around 3,000 tons. If we divide the stock, by the flow, 185,000 divided by 3,000 – we get 61.6 so let’s round up to 62. 62 is how many years it would take to mine the equivalent of all the gold that’s in existence today. Now obviously, the higher that number is, the more rare that something is.
Now let’s do Bitcoin:
Let’s round up and use 19 million for Bitcoin as the stock, and divide it by the flow – how do you figure out the flow. We know we mine roughly 210,000 blocks every 4 years, 210,000 divided by 4 is 52500 blocks per year. Right now the block reward is 6.25 Bitcoins per block you can look that up online. If you multiply 6.25 by 52,500 blocks you get 328,125 which is roughly the amount of Bitcoins we’re going to mint this year which is the flow. So now we divide the stock of 19 million by the flow of 328,125 and we get 57.9 so let’s round up to 58. It would take 58 years mining at the current rate to recreate all the Bitcoins in existence. Now that’s a lot but that’s still a lot lower than gold, so gold is more rare – except – it isn’t. Remember that halving we talked about that happens every 4 years? Bitcoin’s flow is a decreasing number. Because in the year 2024 – the block reward will be 3.125. I’ll save us the math stuff and just tell you that in 2024 the stock to flow number will be roughly 116 years. It would take about 116 years to mine all of the Bitcoins to recreate the stock of 2024. And every 4 years that number doubles and doubles and in the year 2040 – just 20 years from now, it would take almost 2,000 years (1856) to mine all the Bitcoin out.
*None of this is meant to be construed as investment advice, it’s for entertainment purposes only. Links above include affiliate commission or referrals. I’m part of an affiliate network and I receive compensation from partnering websites. The video is accurate as of the posting date but may not be accurate in the future.
