Stock-to-flow fallacies:
- The highest market signal is price;
- Supply (stock) influences demand as important but secondary factor;
- Market cap (stocks, in USD-terms) influences demand as important but secondary factor;
- When we do economic calculation, we are measuring probabilities. In markets, this means a trend;
- The trend must follow the highest market signal (See #1);
- There are four basic trends: Linear, Logarithmic, Exponential, and Power;
- Bitcoin’s price (adoption) follows power;
- Bitcoin’s supply (stock) follows logarithmic;
- Gold, silver, most of finance, et al. follows exponential;
- Keep it simple, but don’t shoehorn, or ham-fist an idea.
It all comes down to the trend. The trend is your friend:
TREND | GOLD | SILVER | BITCOIN |
PRICE | Exponential | Exponential | Power |
EMISSION | Exponential | Exponential | Exponential |
SUPPLY | Exponential | Exponential | Logarithmic |
MARKET CAP | Exponential | Exponential | Power |
The stock-to-flow model is a power curve, with a blend of inputs that are both power (Bitcoin S2F clusters) and exponential (gold and silver growth).
The stock-to-flow model is not an exponential curve.