The Bitcoin stock flow (S2F) model describes how long it will take for Bitcoin to reach its current production rate at the current supply rate and the formation of a metric known as the stock / flow rate.
Bitcoin can be considered an attractive investment option because it has one of the highest ratios between assets and stocks. This is because it takes a long time for Bitcoin to obtain its current circulation supply at current production levels.
Backward Tested Data
Since the S2F coefficient accurately models the Bitcoin price using the data tested, many supporters now believe that the discrepancy between the Bitcoin value estimated by the S2F coefficient and the actual current price can help to understand the future trajectory.
In general, this will be based on the assumption that Bitcoin tends to move towards its estimated value. Therefore, if the predicted value is higher than its current value, this may be considered a bullish indicator, because Bitcoin will have to be estimated in order to reach the price of the model, but vice versa if the crypto currency has a higher value than currently predicted by the model.
Bitcoin Stock Flow
Unfortunately, it may take a long time to actually monitor the discrepancy between the current price and the estimated price, so other tools have been developed to simplify the process. One way to simplify this inconsistency is to determine the meaning of S2F, which can be calculated by dividing the price estimated by the S2F model by the current price in Bitcoin and then subtracting it from that value.
If this value is negative, a positive coefficient indicates that it is overvalued while the Bitcoin value can be considered a low value.
Bitcoin Price Estimation Based on Stock Flow: BTC, $ 8.569.50
According to the Twitter Streaming Stock Multiple (@ s2fmultiple) boat, the last check price is $ 7.343.16 and the estimated price is $ 8.569.50. Bitcoin is currently S2F -0.15. As mentioned earlier, this is considered a bullish indicator because Bitcoin is currently lagging behind the model price.
Actual price: $7,343.16
Model price: $8,569.50
S2F multiple: -0.15 pic.twitter.com/i9rNZdSDhK
— S2F Multiple (@s2fmultiple) January 5, 2020
In its current form, Bitcoin has shown an upward trend over the last three days (from 3 January 2020). During this time, the asset rose slightly below its minimum level of $ 6,900 to more than $ 7,400 today. Similarly, in the last three days, the S2F level has progressively approached zero and rose from -0.21 on January 03 to -0.16 yesterday and today to -0.15.
Based on the above, since its launch in December 2019, the S2F Multiple Twitter bot has always produced a negative S2F coefficient, indicating that the S2F model has consistently exaggerated its Bitcoin value over the last two months. In light of this, no model is perfect and traders should take care not to use such forecasts as the basis for their trade decisions.