This divergence line is also sometimes referred to as ‘Stock-to-flow Deflection Bitcoin’. Because of this, it allows us to easily see how price interacts with stock-to-flow through market cycles over time.

When price moves below the stock-to-flow line the divergence tool turns from red to green. When price moves above the stock-to-flow level, the divergence line turns from green to red. It shows the difference between price and stock-to-flow. It is located at the lower section of the chart and is a divergence chart tool. In addition to the main stock-to-flow chart, we created an additional tool for you to use which is free. The stock-to-flow line on this chart incorporates a 365-day average into the model to smooth out the changes caused in the market by the halving events. This has held true previously in Bitcoin's history. That makes the stock-to-flow ratio (scarcity) higher so in theory price should go up. This is an event where the reward for mining new blocks is halved, meaning miners receive 50% fewer bitcoins for verifying transactions.īitcoin halvings are scheduled to occur every 210,000 blocks – roughly every four years – until the maximum supply of 21 million bitcoins has been generated by the network. The colored dots on the price line of this chart show the number of days until the next Bitcoin halving (sometimes called 'halvening') event. The theory, therefore, suggests that we can project where price may go by observing the projected stock-to-flow line, which can be calculated as we know the approximate mining schedule of future Bitcoin mining. We can see that price has continued to follow the stock-to-flow of Bitcoin over time. On the above bitcoin chart, price is overlaid on top of the stock-to-flow ratio line. There are many other indicators that also forecast the price of Bitcoin, this particular tool focuses on the supply schedule of Bitcoin. It is useful because it can be used as a forecasting tool to identify where the price of Bitcoin may go in the future. Why Is Stock-To-Flow (S2F) Useful For Bitcoin Investors And Traders? Therefore the supply rate is consistently low.

In fact, it is the first-ever scarce digital object to exist! There are a limited number of coins in existence and it will take a lot of electricity and computing effort to mine the 2 million outstanding coins still to be mined. For example, the process of searching for gold and then mining it is expensive and requires time and resources.īitcoin is similar because it is also scarce. It is difficult to significantly increase their supply. These are known as 'store of value' commodities because they retain value over long time frames due to their relative scarcity. The stock-to-flow model treats Bitcoin as being comparable to commodities and precious metals such as gold, silver, or platinum. That is why this model is forecasting that the price of Bitcoin will increase in the future. To date, it has broadly forecasted price correctly as $BTC price has followed the stock to flow line.Īs the amount of bitcoins to be mined reduces over time, the stock to flow number (s2f ratio) increases, as supply coming onto the market is reducing. By hovering your cursor over the line on the chart, you can see the forecasted price. The score on the stock to flow line is the forecasted price for bitcoin at that particular time. It creates a line on the chart above that shows an estimated price level based on the number of bitcoins available in the market relative to the amount being produced (mined) each year. Stock to flow is a forecasting tool for Bitcoin price. Value Days Destroyed (VDD) Multiple New.AASI (Active Address Sentiment Indicator).Bitcoin Investor Tool: 2-Year MA Multiplier.

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