Bitcoin stock-to-flow model updated to reflect Nakamoto's 1 million BTC
Bitcoin's much-quoted stock-to-flow model has been updated to explain that much of the BTC supply is lost forever due to the disappearance of the asset's creator.
Satoshi Nakamoto is said to have more than a million BTC that could be locked away forever, which would change the overall holdings of the very first cryptocurrency.
Bitcoin stock-to-flow model receives an update that was changed due to missing 1 million BTC
Since Bitcoin is the first of its kind and its value is primarily based on speculation, analysts struggle to find data that makes sense as part of fundamental analysis. The most popular model for trying to determine a fair value of Bitcoin based on the underlying protocol and the characteristics of the asset is the much-cited stock-to-flow model that has been popularized by the cryptanalyst PlanB.
The model takes into account the general scarcity of Bitcoin
Bitcoin was created 2008 by the mysterious Cypherpunk Satoshi Nakamoto, who designed the very first cryptocurrency that has certain attributes like an ever smaller supply stream, one fixed total stock and many others, which means that BTC has a digital scarcity that has never existed before.
What comes closest to Bitcoin as an asset is gold due to its scarcity. But even with gold nobody really understands where the limit of the offer is, while with Bitcoin there can only ever be 21 million BTC. As there are so few BTCs available, changes in the offer are particularly relevant. Satoshi Nakamoto himself could have died at this point and with his death over a million BTC would be locked away forever.
Updated version of Bitcoin Stock-to-flow (S2F) chart is now live: https: //t.co/4sEUMozAwX
Stock amount now reduced by 1 million to account for Satoshi’s unmoved coins.
So shows model variance. pic.twitter.com/0mVGVzumXE
– Philip Swift (@PositiveCrypto) 22. January 2020
Since Bitcoin's offer could actually be much closer to 20 million BTC due to the lack of this extremely large portion cryptanalyst Philip Swift updates Bitcoin's stock-to-flow model.
Based on the updated numbers, the leading cryptocurrency's price by market cap is fairly valued at current prices and may even be slightly overvalued.
After the impending halving in May, the value of Bitcoin is likely to rise steadily as supply declines and demand begins to outweigh supply. After halving, according to the model, Bitcoin would be sold until the first quarter 2021 at prices of 100. 000 dollars or more should be fairly valued.
Proof of text: newsbtc