The stock- to- flow is the model that predicts the price of the bitcoin. This model requires the current or knows supply and future or maximum supply. The stock- to- flow model can also forecast the price of the precious metals like silver, gold, etc, fine alcohols, etc. In this model, the stock is the size of the assets reserve and the flow is the yearly or annual production. By the stock- to- flow chart, you can get the different forecast price.
It is important to know how to forecast the price of the bitcoin. For this, there are two plans.
Plan A – Stock-to-flow ratio when gold and silver joins BTC
The ratio of current reserves by the annual production is the stock-to-flow ratio. This ratio predicts the price of bitcoin. When the monetary goods i.e., gold and silver come within bitcoin then the bitcoin price increases. Because of this, the stock-to-flow chart gets updated to set an average of the market value.
Example- the future supply of the bitcoin is nearly 19 million but the production is 0.5 million per year. So, the ratio comes around 38. Now, you can see that the price of bitcoin increases rapidly. In this way, this stock-to-flow ratio continues to forecast the price of the bitcoin.
Plan B – Idea of the clusters
It is the new idea introduced by the stock-to-flow model for the bitcoin price prediction because it has been used in different cases. As you know, bitcoin is a concept proof payment like E-gold. Clusters of the price on the stock- to- flow chart and every cluster give you various forecasts of the bitcoin price. These clusters produce the maximum value of the stock-to-flow. This plan also sets the long- term bitcoin price prediction. This method is one of the best ways to predict the bitcoin price. For more information, Please visit – https://www.smartbitcoininvestments.com/bitcoin-stock/.