Stock To Flow

Stock-to-flow is a model originally used to value commodities like gold and silver. It measures the ratio of existing supply (stock) to new annual production (flow). A high ratio means the existing supply is large relative to new production — which tends to correlate with higher value and scarcity.

Gold has a very high stock-to-flow ratio — roughly 60. It takes about 60 years of current mining to double the existing supply. This is why gold holds value across centuries; it can’t be inflated quickly.

A Dutch institutional investor known as PlanB applied this model to Bitcoin in 2019. Bitcoin’s stock-to-flow ratio increases with each halving — in 2024 it crossed 100, making Bitcoin scarcer by this measure than gold for the first time. His model predicted price levels that, at the time, seemed extraordinary. Many of those levels were subsequently reached.

The model became one of the most discussed frameworks in the Bitcoin space. It also became one of the most criticised.

The honest assessment: the model captures something real — the relationship between scarcity and value is well-established, and Bitcoin’s programmatic scarcity is genuine. But as a precise price predictor, it has limitations. Markets don’t move purely on supply mechanics. Demand, sentiment, regulation, and macro conditions all matter.

Stock-to-flow is a useful lens for thinking about Bitcoin’s scarcity relative to other assets. It’s not a reliable price target generator.

Most serious Bitcoin thinkers use it as one input among many — not as a roadmap.

Tomorrow: the only chart that actually matters for long-term holders.

— The Daily Bit