BTC Stock to Flow looks good, Smoothed Stock to Flow looks even better...

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We likely have all heard about the stock to flow model by now...

It's a model formulated around an assets total supply compared with its rate of new supply that has been used to predict asset prices such as gold, for decades.

Surprisingly, or not surprisingly, it has also worked rather well for bitcoin.

In fact, since inception, the stock to flow model as accurately accounted for over 90% of bitcoin's moves.

Making it something we all should be paying attention to.

However, as the price goes higher and the 'law of large numbers' starts to come into play, it will be interesting to see if it continues to play out with that same kind of accuracy.

Some are betting it won't, some are betting that it will.

An interesting update to the stock to flow model...

We have all seen the original stock to flow model as it relates to bitcoin by now, but if not, it can be accessed here.

https://twitter.com/100trillionUSD/status/1246890677079769090/photo/1

I found an interesting chart that smooths out the stock to flow model as well as adds upper and lower bands to the model.

The results are pretty to look at:

(Source: https://twitter.com/Dean_Trader/status/1246891210066837508/photo/1)

On first glance, it may seem like there is a lot going on on that chart, but pay special attention to that lower band...

The blue one that bitcoin rarely violates.

It is interesting that bitcoin tends to bounce off that lower band quite regularly.

Even with the most recent drop, bitcoin basically went down to that lower band, and bounced.

The blue line is said to be the accumulation support, while the red line is said to be the top of the range during bull runs. Specifically where the peaks tend to happen.

It has worked like a charm to date...

Given this data, it would make sense to buy off the blue line, which is just below where we are now... and then sell at the red line, which is roughly $30k based on the current moving averages.

Though, keep in mind that that top range ($30k) is going to jump significantly in a month or so once the halving happens.

Overall, this next year is going to be make or break time for the stock to flow model.

Bitcoin is either going to get up near $100k at some point by the end of 2021 or the model will have failed and bitcoin will be no where near that price.

And the good news is we only have to wait another 18 months or so to find out.

Really not that long in the grand scheme of things...

Stay informed my friends.

-Doc



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well, I am picking up more sats every month so it can stay where it is for a bit longer and go vertical in 18 months

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Hmm.....the world already has gold that works well as storing value. TBH I don't understand the purpose of BTC as a speculative gold.

Seems to me like people are just trying flip it to the next sucker who will buy higher. Little to no utility value prop.

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Actually the comparison to gold is kind of the point, bitcoin is a better gold in almost every metric.

image.png

The only thing gold has on bitcoin is a long history and the fact that you can hold it in case the electricity grid is wiped out, but in all reality if the electricity grid was wiped out and things turned to chaos, people likely wouldn't even accept gold... food, water, shelter, and ammo become king.

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$ 100,000 BITCOIN seems difficult to me. There cannot even be a mass adoption with such an unstable BITCOIN value. I believe that adoption goes through blockchain 2.0, I don't believe that adoption will take place with BITCOIN. What do you think about this @jrcornel?

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