If you have any experience on crypto forums, you have most likely come across Bitcoin price prediction. Charts, strange acronyms, and more passionate opinions abound in forums than in a summer barbecue. The Stock-to– Flow (S2F) model is one star constantly vying for attention. Some consider it to be genius. Others refer to it as hand-waving. S2F is interesting regardless of your level of HODL, trading, or simple bystander though.

What then in blazes is stock-to- flow? Fundamentally, S2F is an idea drawn from commodities like gold and silver. It simply divides the “stock,” (the current availability) by the “flow,” or annual production. For gold, you dig a tiny bit of new metal annually from the ground; the current pile is massive relative to fresh supply. Gold’s S2F ratio is high, hence it is rare; but, scarcity often results in value.

Drop Bitcoin now into this mix. Satoshi Nakamoto set his programming at a hard cap on 21 million coins, and mining releases fresh coins into circulation. The worst part is that the payout for mining fresh coins halves every four years—a process known as halving. Consequently, the stock increases steadily while the flow keeps getting smaller. After every halving, the S2F ratio of Bitcoin skyrocketing.

Popularized by Dutch quant PlanB, the concept of employing S2F for 2019 Bitcoin price prediction His model shows the historical prices of Bitcoin against its S2F ratio, and—like old story—a trend emerges. S2F claims that price should climb in response to rising S2F for Bitcoin following each halving. The version of Plan B even suggests to forecast significant price cycles.

Sounds very wonderful, right? Not quite rapidly, though. S2F has baggage even if it is elegant. Critics contend S2F completely overlooks demand. Though anyone with WiFi may participate and Bitcoin can be sent worldwide right now, it treats it like gold. Macro events and uncontrolled speculation can thus cause prices much above what S2F “expects.”