Steemit Crypto Academy Contest / S15W2 - Stock to Flow Model.
In our dynamic world of the financial markets, the Stock to Flow (S2F) Model has so much emerged as a potent tool here, indeed captivating the attention of genius investors and analysts alike too.
- But then what exactly is the use of this model, and how does it function?
So Let’s delve well into the captivating realm of the Stock to Flow Model and unravel it's massive potential.
Explain in your own words the Stock to Flow Model, what is its function?
The unique Stock to Flow model is a super concept mainly used to evaluate the present/current stock of any particular asset (the existing supply, or stock) so against the flow of new production which is (the annual production). So In simpler terms, it helps measures the very existing reserves of an asset in well comparison to the yearly production gotten. This very model is much and particularly prominent in the firm evaluation of scarce assets such as gold and, more recently, the Bitcoin.
The unique primary function of the Stock to Flow model is to help gauge the scarcity of an asset. Some Assets with very high stock to flow ratios are then deemed scarcer and so are historically considered to have a greater or higher likelihood of maintaining or by increasing their value over time as it progresses.
- This is so because any higher stock to flow ratio so implies that a much significant portion of the existing supply is of course already in circulation, then making it more challenging for new supply to really impact the overall stock significantly at any point.
What would be the advantages and disadvantages of the Stock to Flow Model?
Advantages:
- Predictive Power: The dynamic S2F model has well demonstrated a quality and strong correlation with the valuation of assets like gold and the Bitcoin, so much making it a potentially powerful predictive tool with ease.
Scarcity Evaluation: The model helps provides us with a clear metric for like assessing the scarcity of an asset, which is very a critical factor in determining its value any time.
Disadvantages:
- The Simplistic Approach: The very model does not well account for all factors influencing an asset's value, such includes as the technological advancements or changes in the demand.
Limited Applicability: It sometimes may not be universally applicable to all the assets available now, most especially those with different utility or consumption characteristics involved.
- Make an analysis of the Stock to Flow graph,
https://www.lookintobitcoin.com/charts/stock-to-flow-model
Viewing properly at the stock- to- inflow graph of Bitcoin as shown above, indeed can see that it's more like a visual graph that helps represents the relationship between the failure of Bitcoin and the price of Bitcoin definitely.
The graph here is much colluded from different axis which firmly is where the Bitcoin price is showing properly. So by looking at the map below in a geography view there, the longer term Investors can so properly identify trends and the patterns that uniquely help them make sound opinions in the purchase of Bitcoin perfectly.
At looking properly at the Stock to Flow Model's once vaticination, we see that the very price of Bitcoin was so much prognosticated to be over $7k until the coming month's halving has taken place geniuniely. This so means that after the 2024 Halving is done, then the Bitcoins price will be reduced into two, of which which the stock- to- inflow Model has helped prognosticated Bitcoin to Maxima's $800k by the coming year of 2028.
And then, grounded perfectly on my analysis been explored, after 2024 Halving, we so may gradually see the Bitcoin price between the price of $40k and maybe $50k for some times then the price can so move over $50k.
This probably my analysis of the graph 📈.
Can this model be applied to STEEM? Give reasons why this Stock to Flow graph model can or cannot be applied.
In my reasoning, When like considering the applicability of the Stock to Flow model to the STEEM as a cryptocurrency, then several factors come into play here. The Cryptocurrencies like Bitcoin share some similarities well with traditional commodities, in such as limited supply, making well the S2F model potentially relevant.
- And However, the basic utility and as well consumption dynamics of the cryptocurrencies differ significantly from each other commodities, then potentially limiting the model's applicability here on Steem.
Conclusion |
|---|
The Stock to Flow model helps us offers a desire captivating lens thus through which to always view the valuation of any assets. And too While its unique application to *cryptocurrencies like the STEEM may not be perfectly as straightforward as with commodities, it then presents us with an intriguing avenue for the further exploration and proper analysis in the ever-evolving landscape of digital assets smoothly.
I'm inviting @whizzbro4eva, @bossj23 and @uduak01 to join me in analysing this concept and relate knowledge for improvement.
~ "Thanks for Reading my Post" ~
Greetings friend,
Your post was absolutely fantastic. I must say, your explanation of the Stock-to-Flow (S2F) Model is crystal clear and really insightful. I love how you broke down the function of the model, highlighting its importance in evaluating the scarcity of assets like Bitcoin. Your analysis of the advantages and disadvantages was so well-balanced, acknowledging both the predictive power and the limitations of the model.
And let me tell you, your interpretation of the Bitcoin Stock-to-Flow graph was presented in such a comprehensive way. It really gave me a full picture of the potential price movements. I can see how much effort and thought you put into understanding and explaining the model. You have a true talent for making complex concepts accessible to everyone.
I wish you the best of luck in the contest. Your knowledge and insights are truly impressive, and I have no doubt that you'll do incredibly well. Keep up the amazing work, my friend.
Thank you so much.
This motivation 💪 is indeed an inspiration gotten from you sir.
You have rightly point out the differences in utility and consumption dynamics among cryptocurrencies, which may limit the model's direct application to Steem.
This recognition of the unique factors affecting different cryptocurrencies showcases a thoughtful approach to analysis. Well done!
Sure boss.
I'm glad you acknowledged it
You have robot so very through the point in simple language and I think that's the aim of the contest that everybody can understand your contact and your hard work and their one I need your post is great to read and it's really good article indeed and the when you are talking about its amplification as steem if we think it's cryptocurrency we can amplify it
Thanks 🙏 for engaging
Great post and your explanation of the Stock to Flow (S2F) Model is very clear and insightful! I appreciate how you broke down the models function emphasizing its relevance in evaluating the scarcity of assets like Bitcoin. Your analysis of the advantages and disadvantages provides a balanced perspective acknowledging both the predictive power and limitations of the model. The interpretation of the Bitcoin Stock to Flow graph is well-presented giving a comprehensive view of the potential price movements. Best of luck in the contest!
Thanks 🙏 alot
I love the way you explained this in details. Your analysis of the stock to flow model shows an expected price of bitcoin by everyone after the Etf but the reverse is happening as if it were a rejection. I love your definition of this model and your reasons for bringing it up on steem. Wishing you best of luck in this challenge and looking forward to reading more of your posts
Thanks 🙏 leader.
I assure you seeing more from me
You have presented a good write up on the given topic Stock to flow Model. This model has help me to understand the Bitcoin market more them.
Yes ma'am,
Stock to Flow model is one among the best techniques to analyze market
Has abordado el tema en todas sus pautas con sabiduría de manera clara y sencilla para transmitir mas eficazmente el conocimiento.
El modelo S2F fundamentado en la escasez aplica a BTC gracias a reunir características que permiten evaluar su nivel de escasez como tener un stock de BTC en circulación y una producción o flujo conocido fijo. No por nada el BTC es considerado una reserva de valor alternativo al oro, gracias además a su gran capital.
Es por ello que resulta difícil aplicar el modelo a STEEM ya que este no reune las mismas características que le permitan determinar su escasez. El valor de STEEM depende en parte del BTC por ser un altcoin, sino su crecimiento orgánico depende también de la creación de contenido y participación de sus usuarios así como de elementos externos por los cuales su precio puede ser influenciado.
Gracias por compartir.
¡Te deseo mucho éxito!
Thanks for this contribution
Upvoted. Thank You for sending some of your rewards to @null. It will make Steem stronger.
Hello dear friend greetings to you, Hope you are having good days there.
You say the Stock to Flow model is a concept mainly used to evaluate the current stock of any particular asset or commodity against the flow of it's new production. It gives us a comparison which one is less and which one is more.So In simpler terms, it helps measures the very existing reserves of an asset in well comparison to the yearly production gotten. You said this model is used for high or strong assets like BTC gold, and silver etc.
The best post dear, best wishes for the contest.