What is Bitcoin’s Stock-to-Flow model?

The speculations about the price that Bitcoin will have from now to months/years give voice to anyone and very often they are figures thrown at random to create a little more media attention.

Bitcoin is in effect a new asset class in the landscape of the modern financial world. As there is no historical data on which to retaliate regarding the price, more and more agencies and personalities in the sector are making their bet at what the price will be in an indefinite time.

Market capitalization model

There are currently two main ways to speculate on the price of Bitcoin in a relatively conscious way: follow the market capitalization or read the Stock-to-Flow model. For the first, the operation is quite simple: once you have identified a market capitalization of Bitcoin that may seem true, just divide it by the amount of BTC in circulation. We often hear people say “Bitcoin will have the same capitalization as gold in X years”. If we do two calculations, the price is simple.

The market capitalization of gold: 8 trillion (suppose and simplify)
Bitcoin in circulation: 20 million (let’s simplify…