Formula & Calculator
Stock-to-Flow Ratio
Measures a cryptocurrency's scarcity by comparing existing supply (stock) to the rate of new supply creation (flow), a model popularized for Bitcoin valuation.
Interpretation
S2F = Current Supply / Annual New Supply. A measure of scarcity. Used in Bitcoin price models (e.g., S2F model).
Variables
| Symbol | Quantity | Unit |
|---|---|---|
| S2F | Stock-to-flow ratio | |
| Current Supply | Total current circulating supply | coins |
| Annual New Supply | New coins created per year | coins |
What it means
The Stock‑to‑Flow (S2F) ratio is the number of years it would take to produce the current supply at the current annual production rate. A higher S2F indicates greater scarcity. It is widely used in Bitcoin price modelling, with a historical correlation to price. Understanding this helps in assessing the long‑term value of scarce assets like Bitcoin.
Worked example
Stock‑to‑Flow Ratio – Two Detailed Examples
Real‑World| Parameter | Value |
|---|---|
| Current Supply | 19,700,000 |
| Annual New Supply | 328,500 |
| Parameter | Value |
|---|---|
| Supply | 19,700,000 |
| New Supply | 164,250 |
Common mistakes
- Stock‑to‑flow (S2F): Ratio of current supply to annual new supply.
- Current supply: The total circulating supply.
- Annual new supply: The amount mined in a year.
- Higher S2F: Indicates scarcity and is used for Bitcoin price models.
Applications
Stock‑to‑flow (S2F) ratio compares the current supply of an asset to the annual new supply, indicating scarcity. This is used as a valuation model for Bitcoin and other hard‑capped assets. A higher S2F suggests greater scarcity and potential price appreciation. Investors use S2F to gauge the long‑term value proposition. Understanding S2F is popular in Bitcoin analysis.
- Valuation of scarce assets like Bitcoin
- Long‑term price prediction based on scarcity
- Comparing the monetary properties of different assets
- Understanding the impact of supply reduction (halvings)
- Educational understanding of stock‑to‑flow model
Frequently Asked Questions
S2F = Current Supply / Annual New Supply. For example, if Bitcoin has 19.7 million in circulation and produces 328,500 new BTC per year, the S2F is 60. This means it would take 60 years of current issuance to equal the existing stock.
The model suggests that as Bitcoin's S2F increases (due to halvings), its scarcity increases, which historically has correlated with price increases. It is a popular, albeit debated, valuation model.
Stock-to-flow is the raw ratio. The model uses this ratio to predict price, often with an empirical formula like price = exp(14.6 × ln(S2F) - 5.0). The model has been criticized for being overfitted.
Yes, it is a standard metric for commodities like gold and silver. Gold has a high S2F (~60), similar to Bitcoin's post-halving levels.
It ignores demand-side factors, assumes price is solely driven by scarcity, and has been less accurate in recent years. Many analysts consider it a useful but not definitive tool.
It increases after each halving as new supply halves. For Bitcoin, it started at about 1.7 in 2009 and will eventually exceed 100 as issuance approaches zero.
Yes, but caution is needed because different coins have different emission schedules and use cases. A high S2F does not guarantee value.
Ethereum's S2F is much lower than Bitcoin's due to its higher issuance, though with EIP-1559 burning some fees, it has become more deflationary. Currently, it is below 10.