Who Created it?
Stock to flow was created by PlanB in 2019.
What is it?
Stock to flow is a model used to determine the scarcity of assets.
The model can also be used to predict prices of assets based on the scarcity.
Who Uses it?
Stock to flow is used by many people, including:
- traders
- bitcoiners
- quants
Mainly, people use stock to flow to estimate a fair price for Bitcoin.
Formula
The formula for stock to flow is simple.
Stock to flow equals:
Stock / Flow
- Stock is the current amount of an asset
- Flow is the amount of an asset produced in a given year
Example
Let's say there are 20 million bitcoins, and 200,000 new bitcoins are issued each year.
Our equation would be:
20,000,000 total BTC / 200,000 new BTC per year = 100 stock to flow (S2F)