# PlanB Stock-to-Flow (S2F)

## PlanB Stock-to-Flow (S2F) Indicator

### Summary

The **Stock-to-Flow (S2F) indicator** measures Bitcoin’s scarcity by comparing its **circulating supply (stock)** to its **annual new issuance (flow)**.

* Each halving reduces new supply, making Bitcoin scarcer.
* The model links scarcity to long-term price trends.
* It is used to evaluate **valuation, cycles, and market behavior**.

***

## Steps to Use the Stock-to-Flow (S2F) Indicator

1\.  Understand the Concept

* Formula: S2F = Stock (circulating supply) ÷ Flow (annual issuance).
* Halvings matter: Every halving cuts supply issuance, pushing the S2F ratio higher.
* Why it matters: Assets with higher S2F (like gold) are scarce and often more valuable.

  2\.  Interpret the Stock-to-Flow Indicator

* Gray step line: The S2F model projection, rising after each halving.
* Colored dots (BTC Price): Show the actual price, colored by months/days until next halving (red = far, blue = near).
* Deviation: If price is above the line → possible overheated market.

  If price is below the line → potential undervaluation.

  3\.   Analyze Historical Patterns

* Price cycles: Bitcoin tends to oscillate around the S2F line.
* Bull markets: Price often overshoots far above the model.
* Bear markets: Price tends to dip below the model.
* Error line (white dotted): Tracks the degree of deviation, helping identify extremes.

  4\.  Make Decisions

* Below the S2F line: Historically a good accumulation zone.
* Above the S2F line: Indicates potential overvaluation and risk of correction.
* Halving awareness: Expect shifts after halvings as new scarcity drives trends.
* Use with other data: Always combine S2F with demand metrics (e.g., active addresses, transaction counts).

## Tips

* Combine with demand-side indicators for a complete picture.
* Track deviations using the error line to spot overbought/oversold conditions.
* Focus on halvings — they are the main drivers of shifts in the S2F ratio.
* Use logarithmic scale charts to better visualize exponential growth.
* Compare with history to spot recurring patterns across cycles.

***

## Created By

### The Stock-to-Flow model was created by **PlanB** (pseudonymous Bitcoin analyst).


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