1.15 Stock-to-Flow Model

Stock-to-flow (S2F) is a ratio used to measure scarcity. Stock is the existing supply. Flow is the new annual production. A higher S2F means harder to produce relative to existing supply.

Silver has an S2F of about 22. Gold has an S2F of about 62 — meaning it would take 62 years of current production to equal the existing above-ground supply. This is why gold has been the premier store of value for millennia.

After the 2024 halving, Bitcoin's S2F ratio reached approximately 120 — making it significantly harder to produce relative to its existing supply than even gold. After the 2028 halving, it will be over 240.

This is unprecedented in monetary history. No asset has ever had such a high and growing stock-to-flow ratio. Bitcoin is becoming exponentially harder to produce over time, while fiat currencies become easier to produce.

The S2F model, popularized by analyst PlanB, has shown remarkable predictive power for Bitcoin's price, suggesting that Bitcoin's market value correlates strongly with its scarcity as measured by stock-to-flow.