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Cryptoknowmics 2022-05-17 18:30:53

How the Stock-to-Flow Model Can be Useful to Bitcoin Investors

Investing in cryptocurrencies can be a challenging pursuit considering their volatility and unpredictability. Accurate decision-making relies on informed predictions of asset values in the crypto space. In order to make more strategic and structured decisions on crypto investment, using the Stock-to-Flow model comes in handy. The Stock-to–Flow model is an investment strategy that measures the current stock of an asset against the production rate or total amounts mined over a year. To be more precise, the S2F model compares an asset’s scarcity or relative abundance. A Small Dive into Stock-to-Flow Model Applications The model measures various commodity values, including natural resources such as silver or gold. These are referred to as store-of-value resources, and in theory, they retain their values over long periods due to low flow and scarcity. There are numerous advantages that investors can get from using the Stock-to-Flow model. BTC S2F model uses live chart data that easily tracks predicted asset prices at a certain time and their actual price at the same period. It is also a time series model since the data points indexed are in accordance with time. Bitcoin’s S2F Model The Stock-to-Flow model of Bitcoin uses live chart data in tracking the asset’s price across various periods. The line chart plots the BTC price across the chart and, in turn, creates a comparative view of Bitcoin’s price forecast vs. its market price. T...

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