What does Stock-to-Flow measure?

S2F divides the total existing supply (stock) by the amount newly produced each year (flow). Higher ratios indicate greater scarcity.

What happens to Bitcoin's S2F ratio after each halving?

When the block reward halves, annual new production (flow) is cut in half while existing supply (stock) stays roughly the same, so the ratio approximately doubles.

What is a major limitation of the S2F model?

The model only looks at supply scarcity. Demand, regulation, adoption, and many other factors also drive price.

Bitcoin Stock-to-Flow Model Explained

9 min readarticleIncludes quiz · 3 questions

Gold's stock-to-flow ratio is about 60 — meaning it would take 60 years of current mining to double the above-ground supply. After the 2024 halving, Bitcoin's ratio exceeds 120. By this measure, Bitcoin is already twice as scarce as gold.

The Stock-to-Flow (S2F) model is one of the most discussed Bitcoin valuation frameworks. Created by the pseudonymous analyst PlanB, it attempts to predict Bitcoin's price based on its scarcity — specifically, the ratio between existing supply and new production.

The formula is simple:

Stock-to-Flow = Existing Supply / Annual New Production

•Gold S2F: ~60 (it would take ~60 years of mining to double the above-ground supply)
•Silver S2F: ~22
•Bitcoin S2F (after 2024 halving): ~120 (it would take ~120 years to double the current supply at the current production rate)

Higher S2F = harder to produce relative to what exists = scarcer

Why it matters: The model plots the S2F ratio of various assets against their market value and finds a strong correlation — assets with higher stock-to-flow ratios tend to command higher market valuations. Bitcoin fits this pattern and, after each halving, its S2F ratio increases dramatically.

Limitations and criticisms:

•Past correlation doesn't guarantee future results
•The model ignores demand entirely — scarcity alone doesn't create value (rare rocks have high S2F but low value)
•Statistical criticisms suggest the correlation may be spurious
•The model predicts extremely high prices that may not be realistic
•It's a single-variable model in a complex system

The right way to use S2F: Treat it as one lens among many, not a crystal ball. It correctly identifies that Bitcoin's programmatic scarcity is unique and that halvings reduce new supply — both genuine factors in price. But it shouldn't be your only basis for investment decisions.

Key Takeaway

Stock-to-Flow captures a real insight — Bitcoin's scarcity increases predictably. But scarcity alone does not create value. Rare rocks have high stock-to-flow but no monetary premium. Demand matters just as much as supply.

Test Your Knowledge

3 questions · Passing score: 75%

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