Hello everyone, I hope you all are doing well. I am here to share my participation in the Steemit Engagement Challenge season 15 week 2. This week is another interesting topic for us as I always loved to learn new things in steemit cryptoacademy contests & I hope everyone would learn some lessons about crypto world after this participation .
1.- Explain in your own words the Stock to Flow Model, what is its function? |
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The stock-to-flow model is a technique used for predicting the future price of a commodity. It is mostly used in the crypto market. It shows us the comparison of the existing supply of the commodity to the yearly supply. This stock-to-flow model is commonly used for the Bitcoin ratio of the total existing supply to the new supply entering the market every new year via mining.
Stock here means the commodity already present or available with us, and the word Flow here means how much new commodity is added to the market, That's why it is called, Stock To Flow Model.
Now it works on two principles; We would have either the abundance of stock and scarcity of Flow, which means the price will go up because we know the scarcity of commodity in the market means a bullish sign.
If it's vice versa, Stock is Less and Flow is More, it means new commodities are coming in abundance, which we can predict the market may go bearish.
So this is the simple this model is working on and it tells us the future price of Bitcoin. It shows us annual data which is why we can trust facts and figures and accuracy.
2.- What would be the advantages and disadvantages of the Stock to Flow Model? |
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| Advantages of S2F Model |
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| 1). We can see a quantitative analysis of the scarcity and overloading of a commodity. We can compare it across different assets. |
| 2). It gives us historical data on BTC's price, covering all its price movements, including previous support, resistance, and corrections. Many analyst use it for their trading. |
| 3). It is said that this model was made primarily for Bitcoin, now good thing is that we can use it for other cryptocurrencies too. |
| Disadvantages of S2F Model |
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| 1). It gives us the result primarily based on previous assumptions. Crypto is a highly volatile and fluctuating market, and merely deciding on it can be risky. It doesn't cover other facts and figures along with it, just the supply and demand mechanism. |
| 2). The relationship between supply and demand doesn't guarantee a complete future price movement. |
The usage of stock to stock-to-flow model is very simple. It shows us the comparison between the current commodity and upcoming stock. Now this graph shows us the data for BTC which is $50,382 but its actual price is $41,790. It fluctuates with time. Whenever the commodity is high and new mining is slow or less, it creates shortage or scarcity in the market and the prints get to shoot.
Source
This always shows us the halving dates of BTC, previous and upcoming, It shows us the data there from 2012, till 2024. It also tells us in 2026 and 2028 we will also have halving events again. Whenever we are near to Halving event, we see a huge up in the price of BTC. We are also shown the 365-day or one-year average price of BTC.
This is very useful too, because it can be used as a forecasting tool to identify where the price of Bitcoin may go in the future. It gives us a future price prediction for Bitcoin using previous or old data.
This tool is somehow different from other indicators. We have many other indicators that also show us the price of Bitcoin, this particular tool focuses on the supply schedule of Bitcoin. It tells if there is a scarcity of BTC in the market or not. This tool is specially made for BTC.
4.- Can this model be applied to STEEM? Give reasons why this Stock-to-flow graph model can or cannot be applied. |
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I would say that I haven't used this Stock to Flow Model for my analysis before, yeah I have heard about it, and I have some friends who sometimes use it. Especially if they see it's at the end of the year or before some major events.
Coming towards the answer whether we can use it for STEEM Coin or not my answer for this would be, I don't think so, we can use it for STEEM. Maybe some people use it for other minor currencies, but I don't think it will give useful accurate, and authentic data that we can trust. It is used for Strong and major platforms like BTC, ETH Gold, Silver, and some other major commodities.
The reason why we can't use it for STEEM Coin is because the mining system of BTC is quite different than Steem. BTC we mine and it works on a proof of work mechanism, while Steem currency works just on a reward mechanism.
BTC is a very major commodity we can easily find out about its scarcity and abundance every day, while finding out this data for Steem is quite hard, because if we have some thousands or even one million wrong figures shown in Steem it doesn't matter, but in BTC if it is shown wrong data on that major level it will damage everything.
Even a hundred-figure mistake will not be accepted. So these are my views on why I think we can't apply Stock to Flow Model on Steem Currency.
This was all about my participation. I hope you all like it & share your valuable comments. I would like to invite my friends @drhira, @pea07, @msharif to share their participation & review about stock to flow model. Best of luck to all the participants.
Thank you, friend!
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@ashkhan
Yes, you have given us very good information about the stock-to-flow model, the stock-to-flow model, which is Bitcoin, if we talk about what we already have and the current stock and future stocks. Used to know the shortage of Bitcoin and the annual Bitcoin we find out the current number and the annual number if speaking, this tool is not used for Steem. Could be because this tool was developed only for Bitcoin. In other words, the creator of this tool was a person who we never know. He remained hidden. We found out about this tool in 2019. From 2009 to 2020, all the predictions made by this tool have been proven correct and indeed it has created many conveniences for us and I pray that the ladder of progress will always be the same. Cross over and be on the side of success, God bless you.
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Greetings friend,
You've shared some great insights about the stock-to-flow model, specifically in relation to Bitcoin. This model helps us understand the scarcity of Bitcoin by looking at the current supply and future production. I appreciate your dedication and hard work. I wish you success.
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Too well align.
Scarcity of commodity indeed possibly means a bullish in crypto market.
So with S2F model one can possibly determine and detect what new commodity is generate yearly and the current availability of the existing.
Then possibly determining if there's scarcity and then assuming the possible price movement.
It only bad that the analysis gives mere assumptions which is not 100% accurate and some time price goes against predictions.
But all the best the concept do deliver abf give much needed knowledge about a commodity.
I love 💕 your presentation it's simple and easy to grab details.
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Upvoted. Thank You for sending some of your rewards to @null. It will make Steem stronger.
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Hello dear friend greetings to you, Hope you are having good days there.
You say stock here means the commodity already present or available in the market, and the word Flow means how much new commodity will be added to the market. Yes this is true. Stock to flow model works on the stock of commodity and upcoming stock. You have beautifully explained it's pros and cons.
You are of the view that we can't use it for STEEM Coin, because it isn't a major commodity as Bitcoin or gold. You have beautifully explained why we shouldn't use it for STEEM crypto currency.
The best post dear, best wishes for the contest.
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Well my dear friend how are you now and whenever I see your post you are one of the best writer I have ever seen and you are the best content creator and how much progress you have done among short period of time it's just amaze whenever you are post is here it's great everything is outstanding the prose presentation the content and how value have answered all the question when I see the answer of your graph you have explain the graph so well best of luck my dear friend for the contest
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Dejas claro que el modelo S2F depende del Stock y el Flujo, ambos son medibles en la métrica del BTC y son la base de cálculo del modelo Stock to Flow. La relación S/F es índice de escasez como el utilizado en las materias primas como el oro y la plata. La escasez del BTC es muy parecida a la del oro, por ello es que el modelo le calza como anillo al dedo.
La escasez es un factor que afecta el valor de cualquier producto, a medida que la escasez aumenta también aumenta su precio si existe una demanda constante o en alza.
Gracias por compartir, saludos y éxitos.
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Dear sister you have made an exceptional article on steam it and I really appreciate because your post has really enlightened me and if and embedded me with enough knowledge about the model
You did really well by breaking down each terminology into a simpler and smaller term so that even a lay man can even understand without stressing their brain
Thanks for sharing wishing you success please engage on my entry https://steemit.com/hive-108451/@starrchris/eng-esp-steemit-crypto-academy-contest-s15w2-stock-to-flow-model-or-or-modelo-stock-to-flow
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You've provided a comprehensive overview of the advantages and disadvantages of the Stock to Flow (S2F) model.
It's true that the model offers a quantitative analysis of scarcity, making it valuable for comparing different assets and providing historical data on Bitcoin's price movements. Thank you for sharing this article with us!
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