Truth About Bitcoin Stock To Flow, Power Law & Price Models

With Bitcoin making new all-time highs, investors are looking to BTC models to help them time the bull cycle peak
So, let's actually look at the validity of Stock-to-Flow, Power Law, and other BTC price models...
We discuss all this and more here!
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Disclaimer:
Nothing within this video should be misconstrued as financial advice. The information provided is for educational purposes only. You are responsible for your own investment decisions.
#Bitcoin #BitcoinPrice #BitcoinNews

[@carpenoctom]

great vid thank you. agreed on having models and watching the data for decision points.

[@BitcoinMagazinePro]

Thanks as always Josh, glad we're in agreement!

[@Внушает]

00:00 Introduction and the Stock-to-Flow Model 00:56 History of the Stock-to-Flow Model 01:32 Criticism of the Stock-to-Flow Model 02:29 Impact of Halving and Other Models 04:15 Moore's Law for Bitcoin 05:09 Disadvantages of the Power Law 06:59 Examples of Using the Power Law 07:38 Popularity and Criticism of Charts 08:38 Linear Regression Analysis and Its Limitations 09:34 Unique Features of Bitcoin 10:29 MVRV Z-Score and Its Application 12:41 Impact of External Factors 13:35 Conclusion

[@BitcoinMagazinePro]

That's great thank you!

[@Andelf-Awaken]

Ignore a haters, we talk with them at the end of 2025. :P

[@BitcoinMagazinePro]

😎🤝😎

[@Matt-jg6zu]

Matt, as always, presents neutral and valid arguments simply and concisely. But as in the response below, I have also observed that the current BTC ETF does have a great impact on price behavior, but this is less effective in on-chain analysis. May I ask Matt what further analysis arguments are there for the impact of ETF on price behavior?

[@BitcoinMagazinePro]

I think the ETFs are having a 2 fold impact at the minute. Firstly, there is a limited amount of circulating BTC available at the minute, so the $50b of ETF accumulation has probably had a significantly greater impact on price than usual (watch an older video of ours named 'This Much Capital Will Send BTC To $100,000' for more about the money multiplier effect). Second, I think non ETF buyers are just tracking what the ETFs are doing. If you're a retail buyer and see Blackrock buying lots of BTC why wouldn't you do the same! I think as the cycle progresses, the ETFs will have less impact, and on-chain analysis will again be much clearer.

[@AnimeXpress184]

Good Alpha Content Señor Thank You for this contribuation. Saludos

[@BitcoinMagazinePro]

You're welcome I'm glad you enjoyed it!

[@Внушает]

00:00 Введение и модель Stock-to-Flow 00:56 История модели Stock-to-Flow 01:32 Критика модели Stock-to-Flow 02:29 Влияние халвинга и другие модели 04:15 Закон Мура для биткоина 05:09 Недостатки степенного закона 06:59 Примеры использования степенного закона 07:38 Популярность и критика графиков 08:38 Линейный регрессионный анализ и его ограничения 09:34 Уникальные особенности биткоина 10:29 MVRV Z-оценка и её применение 12:41 Влияние внешних факторов 13:35 Заключение

[@BitcoinMagazinePro]

Thanks!

[@tboydsto4]

Great data-based rebuttal. I publish a geometric mean based model on X, and regularly get hammered on sell levels and model correlation. I always point back to a combo of on-chain and TA for sell levels and use of models to help support whatever thesis is in play. As you said, no one can predict the future. That’s hard to accept since many look for certainty.

[@BitcoinMagazinePro]

Love the rational take! People want a holy grail indicator that does not, has never, and won't ever exist!

[@YokeRoel]

Thanks for your insights, very useful! I don’t get the hate at all.

[@BitcoinMagazinePro]

No problem and me neither lol.

[@syproductions456]

Great analysis! Do you think that onchain indicators will work this time? Given that most of the money is now in the ETFs, does the bitcoin actually move from wallet to wallet or does the bitcoin simply stay at the broker, transferring from seller to buyer only on their internal books, therefore never logging a 'sell' on the blockchain?

[@BitcoinMagazinePro]

ETF's hold around $50b of BTC while the market cap is $1.7T. Even though they're accumulating heavily they're still just a small part of the Bitcoin network. It's true if many of them are using the same custodian (coinbase) that some of these transactions probably won't happen on-chain. But if that occurs then they're really not influencing the underlying price, on-chain will still be the biggest influence and tell the full story!

[@syproductions456]

@BitcoinMagazinePro good explanation, thanks

[@giovannisantostasi9615]

Yeah, in fact growth in human is a power law up to a point and it stops because of very precise physiological patterns. There is an entire article showing that the growth of teeth, horns, shells are all power laws. That is our entire thesis.

[@SokoladoFabrikas]

Nice vid, despite I really want to some models be true :) So basicallly no one has a clue and it’s impossible to predict price movements?

[@BitcoinMagazinePro]

I wouldn't say it's impossible to predict price movements, here we have been pretty certain for a while price would go up! But focussing just on models and using them to try and predict exact prices is like driving while only looking in your rear view mirror!

[@kanechau]

First to watch, support

[@BitcoinMagazinePro]

Thanks a lot!

[@giovannisantostasi9615]

Many people with much better understanding of you of these things have done serious stability analysis of the power law and show that the power law fit is not changing besides oscillating around a definitive value. The changes in slope is due to the presence of the bubbles but they oscillate around a precise value.

[@BitcoinMagazinePro]

This is the only point that really matters though, any changes in slope negate the models effectiveness. Bubbles will always exist and a model that always alters its data will always be accurate, but not necessarily useful.

[@giovannisantostasi9615]

MVRV works because Bitcoin is a power law. You are basically detrended the price to reveal deviations from the power law.

[@giovannisantostasi9615]

What you complete absolutely miss is the scaling properties. That is the core of the core of the power law that even Trolololo identified. You missed that aspect of Bitcoin, you miss everything.

[@dangercat5844]

thanks Matt, ignore the ignoramouses!

[@BitcoinMagazinePro]

Great word! I'm sure when I first entered Crypto I would have been more susceptible to follow any model that seemingly made everything so simple, so I don't really mind if people disagree with me when I'm just trying to be rational!

[@giovannisantostasi9615]

Also you cannot use arbitrary starting data. The entire point of a power law is to look for the entire scaling behavior. You didn't do your research properly because many people showed stability tests for the power law.

[@cramsa]

Virtually ALL “models” I have seen since 2017 since I purchased my first sats been WRONG! on both the upside and the downside.

[@BitcoinMagazinePro]

Pretty much sums up the entire point of the video then!

[@scorpiofrancis1119]

Im assuming you have contacted Giovanni & proven him wrong with the math via Twitter?

[@BitcoinMagazinePro]

He has been very vocal in contacting me to tell me what I do is wrong... But I have no intention of publicly calling anyone out. I don't mind if he does or doesn't see this video, either way it probably wont change anything!

[@d_e_a_n]

@@BitcoinMagazinePro Did he say anything about your actual criticisms of his power law model?

[@BitcoinMagazinePro]

No, just calls me stupid and wrong lol

[@johnshite4656]

@@BitcoinMagazinePro Ah, the sign of a great masterdebater. Your analogy to age and height is apt. Infinite exponential price increases are not realistic. There are diminishing returns. Bitcoin is already 15 years old. It ain't a baby anymore.

[@amiramnoamdoron]

The halving detriment new floor price .. the bubble happens more because of global liquidity issues + new floor price because of halving …

[@BitcoinMagazinePro]

If we're focussing on miners then I'd say production cost is a more accurate way to determine floor price, but as much as that I'd say long term holder realized price also is very close to a floor price every cycle determined purely from supply and demand of BTC's longest holders.

[@cramsa]

Stock to flow has been invalidated at least TWICE… it’s worthless.

[@BitcoinMagazinePro]

Even if invalidated I believe it's been a net positive metric for Bitcoin and adoption overall.

[@johnshite4656]

It's just far too optimistic

[@peterpetrov6522]

In 2024 we are actually spoiled by so much good data and so many good models! In 2018 most crypto youtubers showed the linear chart and there ya go! Draw your own conclusions! Willy Woo popularized the log chart but at the beginning it wasn't so obvious that log chart will be helpful in any way. It was. If in 2024 you still can't tell that the power law chart is the right "map," then I don't know what to tell you! And BTW the difference between 200k and 300k is very small. Why is everybody so upset and preoccupied with tiny details? What's important is time in the market!

[@BitcoinMagazinePro]

Would love to have a chat with Willy Woo, one of the first analysts I really followed. But nowadays I don't really follow any 'prediction' models, as I said in the video you just end up missing the forest for the trees not focussing on the data that matters!

[@TradeVibeLive]

Technical analysis purely on trends, resistances, supports, and all the basic visual cues is almost completely useless. And it is most useless when you see something in a small coin without looking if its confirmed in the bigger coins like bitcoin. Its like picking a stock because of a candle formation without checking if the SnP500 is not saying something completely opposite to it. And dont get me started on not looking at fundamentals. A lot of candle chart people are almost astrologers.

[@BitcoinMagazinePro]

I do agree that focussing on the macro trend initially is crucial, but I do think TA serves some purpose even if it's just a self fulfilling prophecy!

[@Doug-bi4fv]

I just dislike PlanB for his choosing to confuse everyone via Twitter. He just took the powerlaw and tried to make it his and make money from his prognostication that makes me angry. Sometimes I don't bother fully explaining. Sorry.

[@BitcoinMagazinePro]

From my limited discussions with him he's seemed a nice guy but yes I think we've all seen some interactions that aren't the best look...

[@ura9390]

And his antivax antiestablishment nonsense made following him unbearable

[@johnshite4656]

@@ura9390 I wasn't ever a believer in Plan B, but I didn't know that about the antivax stuff. These influencers really need to be more careful about getting political in public, they lose credibility that way. I just watch Benjamin Cowen videos and I do okay.

[@ura9390]

@@johnshite4656 yes his utter trash over the antivaxx stuff revealed an irrational, unscientific and emotionally paranoid stance which obviously discredited him from a cerebral perspective and meant I unfollowed him to stop getting his drivel in my feed.

[@gotnoname3956]

You make such a video about the stock to flow model (at the beginning) without discussing Out of sample predictions? The stock to flow model predicted an average bitcoin price of 100k for the last cycle. After refitting the model, it is now 50k (part of the training data now). Also for this cycle the stock to flow model will be predicting a price waaaayy to high. Just take a look at the old tweets of Plan B. And I am not talking about the stock to flow accross asset classes. I am talking about the classic stock to flow model and its prediction from 2020/21… The stock to flow model is also statistical nonsense if you think about the model specification. Your take at 3:00 does contradict the stock to flow model and its assumption.

[@BitcoinMagazinePro]

All I said about S2F is that it's a useful tool to see the impact on halving events, which have impacted the supply and demand economics of Bitcoin. The entire point of the video was to not follow any models as every one of them will break eventually!

[@gotnoname3956]

@@BitcoinMagazinePro You also joked about people criticizing you for using the S2F model. This model is already invalidated due to the past cycle. That is the whole point of my comment. Its not a question of "it will break eventually". It already is broken and most people do not even realize it due to the refit. The impact on the supply and demand dynamics is already not significant anymore since the last halving. It was a big impact in the first cycles.

[@giovannisantostasi9615]

I will come up soon with a video showing that the person discussing these topics has no clue of what is talking about.