ByteTree is an analytics firm that provides institutional level data surrounding crypto assets to large investors. It’s Co-Founder and Chief Investment Officer is Charlie Morris.
published by the firm, Morris states that Bitcoin is more like a technology stock than it is a currency, and that the popular stock-to-flow model for predicting Bitcoin’s price is actually a very flawed way to do just that. If Morris is right, this might have major implications for investors and how they make their decisions regarding cryptocurrency investment. If he is wrong, the sky is the limit for Bitcoin’s price, at least if you ask stock-to-flow evangelists. The question is, who is on the right side of the fence here?
What is the Stock-to-Flow Model?
The phrase stock-to-flow model sounds fancier than it really is. The word stock speaks to the existing total supply of Bitcoin available for exchange between investors. The word flow speaks to the number of new bitcoins entering the supply.
an anonymous whale investor we’ve mentioned a few times here at
. Proponents of the model point out that stock-to-flow is regularly predicting a higher and higher Bitcoin price with a significant level of accuracy.
Why Morris Strives to Debunk The Stock-to-Flow Model
Morris argues that the stock-to-flow model only really takes into account the supply side of supply and demand economics. He says it’s really the demand side that investors need to pay attention to since the total supply of Bitcoin is forever fixed at 21 million.
Morris goes on to say that the biggest flaw in the stock-to-flow model is that the model assumes that any new flow of bitcoins are the only bitcoins available for sale. While many investors are inclined to hold onto their Bitcoin and not sell, many others choose to trade it or actually use it to purchase goods and services. That’s why in Morris’ opinion, as the new flow of bitcoins entering the market diminishes thanks to the halving event (which occurs every time 100,000 blocks are mined), the new flow actually impacts the price less and less over time.
The demand side argument is certainly valid, but whether Morris agrees with PlanB or not is almost a moot point. That’s because Morris still sees Bitcoin reaching significantly higher highs in the coming years. He just thinks the stock-to-flow model is a poor way to evaluate Bitcoin’s value.
Do you agree with the stock-to-flow model? Do you think the price of Bitcoin will go higher regardless of the model’s validity? If so, get your Bitcoin at Netcoins, the leading cryptocurrency exchange in Canada.
with Netcoins. Create an account, fund it with an e-Transfer (other funding options available), and head to the trade page to buy or sell bitcoin. Netcoins is a fully regulated, publicly owned crypto trading platform.
Thanks for reading. For more blogs on all things in Bitcoin, you can read more here. If you’re looking to buy Bitcoin in Canada, find out how here.
Written by: Jack Choros
Writer, content marketing at Netcoins.
The information provided in the blog posts on this platform is for educational purposes only. It is not intended to be financial advice or a recommendation to buy, sell, or hold any cryptocurrency. Always do your own research and consult with a professional financial advisor before making any investment decisions. Cryptocurrency investments carry a high degree of risk, including the risk of total loss. The blog posts on this platform are not investment advice and do not guarantee any returns. Any action you take based on the information on our platform is strictly at your own risk. The content of our blog posts reflects the authors’ opinions based on their personal experiences and research. However, the rapidly changing and volatile nature of the cryptocurrency market means that the information and opinions presented may quickly become outdated or irrelevant. Always verify the current state of the market before making any decisions.
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