RATE Group | Bitcoin Stock-to-Flow Model is Massively Overhyped: Analyst
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Bitcoin Stock-to-Flow Model is Massively Overhyped: Analyst

06 Nov Bitcoin Stock-to-Flow Model is Massively Overhyped: Analyst

Posted at 12:06h in Bitcoin News by

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A financial forecasting tool that predicts bitcoin market cap would hit a trillion-dollar valuation is misleading, according to cryptocurrency analyst Alex Krüger.

The noted economist called Bitcoin’s Stock-to-Flow Model (S2F) “massively overhyped” as he criticized it for not assessing certain crucial parameters. In retrospective, S2F is a ratio of a commodity’s stock (the units in circulation) and its flow (the amount produced in a year). That said, the model specifically puts weight on the supply factors without dwelling aggressively on the demand side.

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Stock to Flow (Scarcity) | Image credits: PlanB

S2F so far has been instrumental in predicting the prices of traditional assets like Gold and Silver. Quantitative analyst PlanB tested the same predictive mechanism on the bitcoin market in his paper published on March 23. He noted that bitcoin exhibited the same properties as that of traditional commodities: that of scarcity. He said it drives the value of every commodity,…

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