Hey, what's S2F multiple mean?
DaBigTrain is right in that there is alot of info out there alot better than I can provide, but I'll do my best to give a quick overview.
Stock-to-Flow (S2F) is basically an inverse measure of inflation. With an inflation rate, you are dividing new supply of good by existing supply of good (Flow/Stock). When calculating S2F ratio, simply flip inflation ratio (Stock/Flow). A high S2F basically indicates that the new supply of a good is a smaller fraction of the existing supply, perhaps having less leverage on price.
Higher inflation (low S2F) is seen in things like commodities (corn, beef, oil). Low inflation (high S2F) is seen in gold and eventually bitcoin as halving schedule progresses. Roughly every 4 years the halving event occurs, at which point the regularly issued block subsidies are cut in half for the next ~4 years. Eventually, the total number of bitcoins in supply asymptotically approaches 21 million- I believe around 18 million have been issued to this point.
The basic idea behind the S2F model is that increasing scarcity of BTC will drive the price up. Using historical data, pseudononymous PlanB on twitter has come up with a model which transforms the S2F ratio of bitcoin into a market cap of bitcoin, which can be easily divided into a bitcoin price (with some consideration for lost coins maybe or maybe not counted in stock). Since the BTC S2F is always increasing, it speculates that BTC price will always increase in the long term. The model has an extremely high coefficient of determination, around .99, but many theorize that there is a spurious relationship- lots of advanced statistical math workign to prove cointegration that I don't particularly understand.
Depending on which S2F model is being used, a target price prediction has been made at $55k, $100k, and $288k by Plan B for the next 4 year halving cycle. He inst attempting to predict an exact high price at an exact date, but says that the target price should have printed BTC prices on either side of it.
I don't really believe much in the model because I don't have the statistical background to confirm or debunk, but the leading statistical proponent of the model recently determined that it is probably BS. Whether the model is right or wrong, I do believe in bitcoin medium and long term so its fun to read the stories about it and get hype about the yachts we will buy.
Plan B article 1- $55k
https://medium.com/@100trillionUSD/modeling-bitcoins-value-with-scarcity-91fa0fc03e25Plan B article 2- less about S2F, interesting stuff about bitcoin portfolio sharpe ratios
https://medium.com/@100trillionUSD/efficient-market-hypothesis-and-bitcoin-stock-to-flow-model-db17f40e6107Plan B article 3- $288k
https://medium.com/@100trillionUSD/bitcoin-stock-to-flow-cross-asset-model-50d260feed12I cant find where he predicted $100k- might have just been on twitter.