Stock-to-flow (S2F)

The ratio comes from commodity analysis: gold has a high stock-to-flow because the gold already mined dwarfs annual production, which is one reason it holds value. Bitcoin's ratio is calculated the same way, dividing circulating supply by coins issued per year. Because issuance halves every four years, bitcoin's stock-to-flow jumps after each halving and has already surpassed gold's.

In 2019 an analyst known as PlanB published a model that fitted bitcoin's market value to its stock-to-flow ratio and projected sharply higher prices after each halving. The chart spread widely during the 2020 to 2021 bull market, and S2F became shorthand for the idea that halvings drive bitcoin's price.

The model's projections diverged sharply from reality after 2021, and critics point out that it ignores demand entirely, since scarcity alone does not create value. Statisticians also noted that the relationship may be spurious, driven by two series that both rise over time. The ratio itself remains a useful description of bitcoin's predictable, declining issuance.