After the publication of the book by Saifedean Ammous (“The Bitcoin Standard“) the stock-to-flow approach - which had its origins in commodity-market analysis - has begun to be used as a tool to analyse Bitcoin. This is in line with the basic idea behind Bitcoin, which was explicitly designed as a new monetary good and geared to precious metal forms of money. Accordingly, new bitcoins cannot be mined indiscriminately. At the same time, Bitcoin is purely digital and is therefore frequently referred to as “digital gold.” The stock-to-flow approach provides a simple quantitative framework for analysing the (price) trend followed by Bitcoin: it is a metric which has a high explanatory power and makes Bitcoin comparable to gold and its closer cousins. In particular, extrapolating Bitcoin’s stock-to-flow ratio into the future generates interesting insights: the inference to be drawn is that Bitcoin will already have a similarly high stock-to-flow ratio as gold in the coming year. How is this possible?
The closer we get to the halvening the more and more this term is used. The research team at Bayern LB put together a nice 7 page document. However they have not taken into account the dip following the halvening.