Our weekly crypto derivatives analytics report delves into macro events; the current state of crypto and trading signals from spot trading volume; and futures, options and perpetual contracts.

At the start of the week, Bitcoin showed signs of decoupling from US equities. However, US president Trump's positive remarks about the US-China trade war (which had included a 145% tariff on Chinese goods) triggered a relief rally across markets. As a result, BTC has resumed moving up with US equities. 

This rally has led to a rise in short-tenor implied volatility and a recovery in BTC’s put-call skew, indicating that traders are seeking upside exposure.

Please check out the report’s highlights.

Perp open interest rises across the board

Perpetual open interest increased significantly this week across various tokens, especially ETH. Perpetual trading volumes also rose. Notably, Ap 7, 2025 recorded the highest trade volume of the month, following Trump's comment, "Forget markets for a second, we have all the advantages."

BTC option open interest shows a mixed picture; put-call skew in short tenor sends positive signals

President Trump’s recent willingness to negotiate a trade deal with China’s President Xi triggered a relief rally across asset classes, including crypto. Bitcoin had already risen 7% since Apr 21, 2025, prior to Trump's comments. Despite this rally, open interest in puts has outpaced calls, with options volume remaining relatively balanced. 

It's unclear if the demand for puts reflects a hedge against downside risks, or a bet against the upward movement. Meanwhile, perpetual funding rates are providing limited insight into sentiment. However, the recovery of the put-call skew at short tenors indicates that traders are seeking upside exposure to the rally — and are willing to pay for it.

ETH unexpectedly outperforms BTC in this relief rally

ETH's response to the recent crypto market recovery has diverged from previous trends: it outperformed BTC in spot prices, a rarity in past rallies, and open interest in calls exceeds that in puts — opposite to BTC's trend. In addition, ETH call open interest is nearly double that of puts, with calls dominating options volumes. This suggests traders anticipate ETH will reduce its significant underperformance against both BTC and other “ETH killers” like SUI and SOL. Additionally, the spot rally has led to another term structure inversion for ETH.

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Bybit X Block Scholes crypto derivatives analytics report (Apr 24, 2025): Put-call skew recovers at short tenors, showing reviving sentiment

Explore all the hottest Bybit events happening during the week of TOKEN2049 Dubai in this article.

It’s that time of year again — TOKEN2049 Dubai is back, and the city is buzzing with excitement. As one of the most anticipated events on the crypto calendar, it’s not just about the main conference; it’s about everything happening around it, too. From side events and workshops to exclusive mixers and demo days, Bybit is showing up in full force this year. Here's your inside look at what to expect during this action-packed week.

The heart of TOKEN2049 Week, TOKEN2049 Dubai promises two full days of future-facing discussions and innovation in the world of crypto. At the center of it all is Bybit’s immersive booth experience, built on the theme 

. It’s not just a theme — it’s a vibe. Picture claw machines, 

If you’re heading to TOKEN2049 Dubai, be sure to drop by the Bybit booth (located at P33) and chat with our extraordinary Bybit team! And don’t miss your chance to grab a gacha token by scanning our QR code with Bybit Pay. You could walk away with exclusive Bybit merch! 

DMCC x VARA: Crypto regulations and business growth

Policy meets progress at this exclusive evening event co-hosted by DMCC and VARA. This gathering brings together regulators and industry leaders for an open discussion on the future of digital asset compliance and business growth in the region.

You can expect sharp insights, candid perspectives and forward-thinking dialogue about what it really takes to scale a crypto business in a regulated environment. If you care about the future of web3 in the UAE, this is one event to mark on your calendar.

Bybit After Hours: Exclusive Insights & Networking 

 is a private cocktail evening for top-tier traders and long-time supporters of Bybit. This event is equal parts networking, knowledge sharing and celebration.

 to strategic conversations with the Bybit team, this night is tailored to those who trade big and think bigger. With an invite-only guest list, it’s set to be one of the most exclusive experiences of the week.

The Crypto Hub x Bybit Crypto Ark Demo Day

 is all about bringing hands-on energy to the web3 scene. Hosted at the Crypto Ark inside Bybit’s office, this event welcomes founders, devs and crypto creatives for a casual evening of product showcases, idea exchange and light networking.

While Bybit provides the space, the real spotlight is on the community — those shaping the next wave of innovation in web3.

 from across the CIS region are gathering for a deep dive into the tools, tips and strategies that drive growth at Bybit. This meetup goes beyond surface-level sharing — expect actionable workshops covering our Bybit Affiliate program and affiliate best practices.

It’s also a chance to hear directly from Bybit product leads and regional managers, share success stories and walk away with fresh ideas to maximize conversions. 

Wunderbit x Bybit: “Hey, Trading Bot, where is my profit?”

 are here to stay — and this event is going deep into what makes them tick. Co-hosted by Wunderbit and Bybit, the evening workshop blends honest stories from real traders with expert insights on how to avoid common automation pitfalls.

From bot setups that work to the ones that quietly drain your profits, this is your chance to ask the tough questions, hear unfiltered answers — and maybe rethink how you’re running your own bot strategy.

 (RWAs) are taking center stage at the RWA Gulf Summit, a high-powered event co-hosted by Qatar National Bank, Commercial Bank International and DMZ Finance. This summit brings together bank leaders, wealth funds, participants in DIFC, institutional investors and industry pioneers to explore the evolution of tokenized finance in the Middle East and beyond.

Bybit’s Head of Financial Products Jerry Li will take the stage to discuss how 

 (CEXs) can harness RWAs for enhanced yield and 

Dubai's Pinnacle Mixer: Mantle, Mirana, Bybit and Ethena

High above the city, this mixer brings together some of the biggest names in web3 — Mantle, Mirana, Bybit and Ethena. Expect an unforgettable evening of casual chats, cross-chain connections and cocktails with the minds behind some of today’s most innovative projects.

This private event is all about experiencing Bybit Pay in action. See interactive demos, grab a sneak peek at upcoming partnerships and network over bites and drinks. It’s a rare behind-the-scenes look at the way Bybit is shaping the future of crypto payments. 

Wrapping up the week is the Bybit Institutional Symposium — a full-day event dedicated to aligning strategies with institutional clients and forging new collaborations. From macro views to product deep-dives, this conference is built to spark big conversations among serious players.

The day concludes with a gala dinner, a fitting finale to a week in which ideas, connections and innovation have taken center stage.

Intermediate

Bybit Learn Highlights What to Expect at Bybit

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Highlights: What to expect at Bybit (Apr 28–May 2, 2025)

Balance (EPT) is revolutionizing web3 gaming with evolving AI companions, blending blockchain, strategy, and intelligent gameplay in one powerful platform.

Artificial intelligence (AI) agents are a key growth area within the blockchain industry. Projects like Artificial Superintelligence Alliance (FET), 

 (AI16Z) and countless others have been essential components driving the overall crypto market. As of April 2025, the CoinGecko portal lists more than 500 cryptocurrencies within its category of AI Agents. These intelligent assistants are now helping individuals and businesses analyze markets, create textual and visual content, automate work processes and trade profitably.

There's a further area where AI agents on the blockchain are flourishing: the world of 

 gaming. In this sphere, bots and agents based on AI algorithms are helping users develop the best in-game strategies, succeed in the competitive world of play-to-earn (P2E) and overcome key challenges in complex gameplay.

Balance (EPT) is a blockchain gaming project that takes the use of 

 to a completely new level. The creation of the team at the world’s largest social gaming platform, E-Pal, Balance offers players AI agents that can aid them in the in-game environment and serve as their personal companions. Based on a multi-layer architecture, the platform offers some of the most cutting-edge use cases for gaming-oriented AI agents.

 (EPT) is a web3 gaming platform that allows players to easily create, own and use AI companions within the blockchain games it supports.

 Balance supports a variety of first-party (internally developed) and third-party web3 games. You can deploy your AI gaming companions and they’ll act as your assistants, friends or co-players within Balance games.

Using Balance.fun, the platform’s primary web interface, you can create your AI agents and specify various details, such as appearance, personality and functions.

Balance isn’t just another obscure crypto gaming platform. The origins of the project date back to 2020, when the E-Pal social gaming provider was launched by four young California-based technology entrepreneurs — Brian Xiong, Tung Pham, Yuzhe Norris Wang and Yuanzhe Li. E-Pal quickly became a leading force in the newly emerging social gaming field, helping players worldwide find gaming companions. By early 2024, E-Pal had become the world’s largest gaming companion platform, boasting 4.2 million users and 450,000 Epals (gaming companions).

In February 2024, the E-Pal team focused its efforts on 

 and AI technologies, starting the development work on the Balance gaming platform. In September of the same year, Balance went live.

Per the project’s documentation, the platform operates on its own chain, Balance Chain, with 

 (AA) technology used for cross-chain communication. The fungible and 

 (NFTs) held by user accounts are based on the 

A key part of the Balance ecosystem is Key Nodes — purchasable 

 that help with the processing, storage and distribution of data required in the resource-intensive environment of web3 gaming. Some applied instances are the management of real-time leaderboards and the automatic distribution of loot and in-game currency. These nodes can also support the computational requirements of training AI models. As a reward for their work in supporting the platform’s operations, Key Nodes receive a wide range of rewards and benefits, including distributions of EPT tokens, the platform’s native cryptocurrency.

As the ecosystem develops, Key Nodes are envisioned to be involved in governance, 

 launch in September 2024, Balance introduced its Points System, designed to reward early contributors to the platform. During the campaign run in September, users could earn points by completing various specified tasks in various activities, such as joining the project’s social media pages or commenting and reposting.

The 400 users with the best performance in the Points System earned a whitelist spot to receive Pioneer Badge NFTs — distinct tokens that provide owners with early access to games, future campaigns, airdrops and beta testing opportunities. Pioneer Badge NFT holders can also enjoy other benefits, such as premium NFTs and voting rights on the Balance platform.

Balance’s platform provides a set of tools to create and use intelligent companions for Balance-based games. You can design your AI companions by specifying their key traits and behaviors through custom prompts and strategies. The AI agents on Balance can assist you in battles, gaming contests, learning, routine task execution and interactive entertainment.

Balance’s platform is made up of five key layers, each one serving a specific purpose in supporting its user and developer communities. At the top of the architectural stack is the application layer, which acts as the main interface for users to interact with human and AI companions and the wider Balance community.

The application layer also contains the AI Battle Reporting System, which is designed to give users feedback and analysis tools on their performance in the platform’s gaming ecosystem. AI technology is leveraged here to provide personalized analytics and performance improvement recommendations.

A range of NFTs are also part of the layer. These include in-game asset NFTs, as well as 

 (SBTs) that serve as summaries of the holder’s achievements.

The platform layer hosts the various games within the Balance gaming universe. These include both internal games and third-party games that have partnered with Balance. The key concept uniting all of the games is the active integration of AI companions and AI players, making the platform a unique environment in which humans and AI agents play, interact and compete.

The platform layer also features an AI-driven NFT launchpad that offers a rich tool set for creating personalized NFTs for games and applications. These NFTs can be traded on Balance's NFT marketplace, which is also an integral part of the platform layer.

The protocol layer includes a trio of critical protocols — the Fans Protocol, Epal Fan Token (FT) Exchange Protocol and Asset Protocol. The Fans Protocol lets players launch and manage their Fan Tokens, creating opportunities for influencers and community builders to tokenize their efforts and launch high-potential crypto assets. Meanwhile, the Epal FT Exchange Protocol facilitates the management of (and trade in) Fan Tokens.

The third protocol, Asset, is used for the comprehensive management of a wide range of digital assets on Balance, providing easy-to-use tools for asset creation and trading.

The token layer is designed for core operations involving the platform’s native EPT token. This layer supports the use of EPT for in-game purchases, access to services and AI companions, Fan Token minting and trading, in addition to other functionalities.

This is the underlying infrastructural layer that powers the platform’s operational mechanism. It can be described as Balance's operating system, and is made up of several critical components: the node system, the Balance 

, the Balance Chain network and the platform's unique ID system.

The node system provides the computational and storage resources to power games and other functionality on Balance. In addition, the system acts as a key connecting medium between Balance Chain and the AA functionality that lets the platform enjoy cross-chain capabilities.

The Balance stablecoin, also part of the infra layer, is designed to reduce volatility and bring rate stability to the platform's gaming ecosystem. The Balance stablecoin system helps players engage in asset trading without the fear of wild market fluctuations, an important consideration in the 

Designed to support multiple chains, Balance Chain operates based on dynamic protocol adaptation, automatically selecting the optimal blockchain platform according to user preferences and needs. This dynamic adaptability is designed to reduce costs, improve operational speed and enhance overall security for users.

The final major component of the Balance infrastructure layer, the Balance ID system, is a unified and secure user authentication and identity management solution. To be introduced later in 2025, the ID system will let users access all services and games within the Balance ecosystem via a single set of cross-platform decentralized credentials. In addition to human players, also AI companions will have their unique IDs.

EPT is the native cryptocurrency of Balance. Although the platform has been operational since 2024, the EPT token was just launched on Apr 21, 2025, with a total and maximum supply of 10 billion. It was issued on two major blockchains — Ethereum and BNB Chain. EPT has a wide range of functional use cases on the platform, including the following:

The EPT token's supply allocation is per the chart below.

 as a swap pair with USDT, and through the exchange's 

 based on USDT. You can also take advantage of Bybit’s campaign dedicated to the token to grab a share of the 

Under the terms of the event, new users can earn EPT rewards by accumulating a deposit volume of at least 3,000 EPT, or by depositing at least 100 USDT and trading 100 USDT worth of EPT via their first spot trade with Bybit. Meanwhile, existing users can qualify for rewards by trading at least 500 USDT worth of EPT on Spot. The event is valid through May 5, 2025, 9AM UTC.

As of Apr 25, 2025, the EPT token has been on the market for only four days, and is trading at $0.0117, which is 26.4% lower than its ATH of $0.01708 on Apr 21, 2025, and 11.4% higher than its ATL of $0.01129 on Apr 22, 2025.

Long-term price forecasts for EPT are mostly bullish. DigitalCoinPrice 

 of $0.0412 in 2027 and $0.0615 in 2030, whilePricePrediction 

These and other emerging long-term forecasts for the token don't constitute investment advice. Given EPT's extremely short history on the market so far, 

 on the token's future prospects, carefully assess market fluctuations within the crypto gaming niche and consider all other relevant factors before investing in it or any other cryptocurrency.

Capturing emerging market trends and sensing the broader market conditions, the team at E-Pal recognized the tremendous potential of gaming companions back in 2020. Four years later, E-Pal realized that the new market dynamics in gaming called for something even more innovative — the use of AI companions, in addition to fellow humans. The resulting product, the Balance platform, is now racing to stake the claim to the best web3 gaming environment supported by AI agents.

The platform's unique features — cross-chain functionality supported by an AA mechanism, a dynamic exchange system that selects the best network for users' transactions and, most importantly, intelligent AI companions — can certainly help establish Balance as a leader in this niche of web3 gaming.

AI agents are taking the gaming industry by storm, with blockchain technology acting as a powerful enabler of these intelligent friends of ours. The Balance gaming universe — supported by the proven track record of E-Pal — has a great chance of becoming the go-to environment in which to befriend your next artificial gaming partner.

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Balance (EPT): Revolutionizing web3 gaming with evolving AI companions

Mantle has launched the Mantle Index Four (MI4), an institutional-grade fund providing diversified exposure to yield-bearing digital assets. 

The S&P 500 rose 2.03% on strong Alphabet earnings and optimism over a possible Fed rate cut. Gold jumped 1.5% to $3,338 as trade tensions rose and a weaker dollar, along with falling yields, boosted demand. Fed rate cut signals also supported the rally. The Coindesk Indices, which tracks the broader crypto market, rose 0.74%, with Bitcoin up 0.06% and Ether down 1.89%, in the past 24 hours. Trade these markets and more with up to 500x leverage on Bybit MT5 using this 

Today's top performer is INIT, up 15.4%, following the launch of Initia, which aims to revive the appchain concept with an interconnected network and an INIT token airdrop.

Initia (INIT), founded in 2022, is a modular blockchain platform that combines a Layer 1 network with customizable Layer 2 rollups, enabling scalable decentralized app development. It offers flexibility in virtual machines, gas tokens, and transaction systems, while ensuring interoperability and addressing issues like liquidity fragmentation and network congestion. Initia has 

 to revive the appchain concept by offering a network that integrates appchains in a cohesive, interconnected way. The platform emphasizes full-stack control for apps, avoiding fragmentation. Initia is also launching an airdrop with claims available until May 24, 2025. The native token, INIT, has a fixed supply of 1 billion, distributed across eight categories.

Check out the latest prices, charts, and data of 

, an institutional-grade fund providing diversified exposure to yield-bearing digital assets. In partnership with Securitize, which has tokenized over $3B in assets, the fund aims to fill a market gap by offering native yield generation in a traditional fund format. Mantle Treasury has committed up to $400M as the anchor investment. The fund will rebalance quarterly and incorporate DeFi-native staking strategies, such as mETH and bbSOL, while ensuring investor protections. MI4 targets both crypto-native and traditional investors, with Phase 1 rollout scheduled for Q2 2025.

Yesterday, BTC spot ETFs saw a total inflow of $114.7 million, all from non-GBTC funds, while GBTC recorded no flow.

Dolomite, the 10th largest DeFi lending app, is launching a 200M token 

 (20% of total supply) during its TGE on April 24, rewarding users based on platform usage. The DOLO token powers a three-token system alongside oDOLO and veDOLO, enabling incentives, governance, and potential revenue sharing. With over $800M in TVL, Dolomite expands to Berachain, integrating with its Proof of Liquidity system to offer advanced lending features and asset utility.

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Mantle launches MI4 fund for institutional-grade digital asset exposure and yield generation

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Bitcoin

Bitcoin stock-to-flow model measures Bitcoin's value through the rate of stock production and the scarcity of the resource. But is it accurate for price prediction? Find out more.

The cryptocurrency market is in its infancy and experiencing high growth. Due to its novelty, investors and traders have been looking for long-term valuation models to determine the appropriate prices for Bitcoin and other cryptos. Since Bitcoin’s total supply is limited and predicted to be mined out by 2140, one can’t help but wonder if Bitcoin’s price will continue to rise due to its absolute scarcity. One such quantitative model called the stock-to-flow model measures the Bitcoin value and predicting Bitcoin’s price over an extended period. 

We’ll look at what the stock-to-flow model is and make a comparison between the stock-to-flow of both 

. Then, we’ll unpack a model that incorporates the stock-to-flow ratio for Bitcoin and predicts its price. Lastly, we’ll discuss some problems that may prevent this model from being an accurate predictor of Bitcoin’s future.

Stock-to-flow is an investment model that measures an asset’s current stock against the rate of production or the total amount mined over the course of a year. Stock-to-flow is used to compare the relative abundance or scarcity of a particular resource.

In theory, if a resource is more scarce — for instance, precious metals such as gold, silver or platinum — then it’s likely to be a better store of value, meaning that it should retain its value and purchasing power over the long term. Beyond natural resources, other commodities such as real estate, stocks and bonds have traditionally been used as stores of value, too.

Though traditionally used as a way to compare various established resources, stock-to-flow has been adapted as a way to valuate Bitcoin, the first scarce digital resource that’s believed to be a store of value.

Valuing Bitcoin using the stock-to-flow model began with a pseudonymous author, PlanB. In his article, 

, the author explains how the flow model makes sense for an asset like Bitcoin through the highlights of the statistically significant relationship between the circulating scarcity and its impact on price.

PlanB argues that Bitcoin can be valued as a scarce resource because it contains “unforgeable costliness.” To 

, massive amounts of electricity are required at a considerable monetary cost. The author argues that these properties push Bitcoin into a group of scarce assets that can be relatively valued using the stock-to-flow model.

This is different from valuating traditional fiat currency because centralized authorities can decide to create more fiat. Fiat currency isn’t scarce and is theoretically available in unlimited supply. Bitcoin, however, has over $18 million of existing supply out of the capped 

 of 21 million, which will be mined by 2140.

The protocol behind Bitcoin is written such that no more Bitcoins will be mined or created once those 21 million have been brought into existence.

Due to the open-source code of Bitcoin, we know that Bitcoin’s rate of production is always decreasing. Every 210,000 blocks, or about every four years, the network goes through a halving process. This means the amount of Bitcoin a miner receives as a reward for validating a block is cut in half. This 

 entails that the production of new Bitcoin becomes smaller every four years.

This has a fairly immediate impact on the Bitcoin value, as the stock-to-flow ratio increases at each halving — creating an even scarcer resource.  

The stock-to-flow ratio is a straightforward calculation.

In this case, stock represents the current availability of the resource. Using gold as an example, its stock would include how much gold has already been mined

The flow would represent the new gold being mined. Generally, the stock-to-flow ratio is measured on a 12-month basis. Therefore, its flow would represent how much mining is expected to take place over the next 12 months.

For Bitcoin, stock would include the amount of Bitcoin which has already been mined to date, and flow would refer to the amount of Bitcoin being mined over the next 12 months.

Since Bitcoin’s code is open-source, anyone who can read computer code can see how Bitcoin works. As a result, we know exactly how much Bitcoin exists at this moment. Additionally, we know when, and how much, new Bitcoin is created — identifying the supply scarcity.

 have been mined. The average time for the production of a new block in the Bitcoin blockchain takes around 10 minutes. As an incentive for the mining efforts, miners are rewarded 6.25 BTC whenever they add a new block of transactions into the blockchain. 

This means that 6.25 BTC are created every 10 minutes.  

That’s 37.5 BTC (6.25/10 minutes × 60 minutes/hour) created every hour, and 900 BTC (37.5/hour x 24 hours/day) created daily.

Therefore, the current annual flow of Bitcoin is 900/day x 365.25 days per year = 328,725 BTC.

As of fall 2021, the circulating supply of BTC was 18.8 million. There is a flow of 0.33 million bitcoins (328,725 ÷ 1,000,000).

This gives Bitcoin a current stock-to-flow ratio of 18.8 million ÷ 0.33 million = 57.

Every four years, the number of bitcoins mined is halved. At the time of this writing, a miner receives 6.25 bitcoins as a reward for mining each block. When the next halving occurs in 2024, the mining reward will be reduced to 3.125, which means the rate of new Bitcoin being created after that time will be reduced by 50%.

This inevitably and consistently reduces the flow portion of the ratio. When you reduce the denominator of a ratio, it increases the total value of the ratio.

As a result, Bitcoin’s SF ratio will increase significantly at the next halving in 2024, driving it to a ratio of nearly 120.

A low stock-to-flow ratio suggests there’s a lot of new production relative to the current stock available. This implies the inflation of the resource is likely to be strong. When a product is heavily inflated, the price to buy that product lowers significantly.

Fortunately for Bitcoin, its S2F ratio is unlikely to shrink. This is because the numerator of the ratio is steadily increasing each year. The denominator of the ratio will shrink every four years. As a result, the resulting S2F ratio continues to grow.

Gold vs. Bitcoin Stock-to-Flow Models: The Differences

There are several fundamental differences between the SF ratios of gold and Bitcoin.

The current SF ratio for gold is near 62.

As you recall, the current SF ratio for Bitcoin is near 57.

The similarity of these SF ratios indicates the scarcity of these two resources, meaning that they’re excellent stores of value.

Though these ratios are relatively close together, there is a notable difference: Gold’s SF ratio has fluctuated over the past 100 years.  

Since 1900, gold’s SF ratio has bounced between 45 and 90. This is largely a result of the production rate increasing and decreasing over time based on market conditions.

On the other hand, Bitcoin’s mining schedule is systematic and known in advance. Production of new Bitcoin will decrease by 50% every four years. This means that Bitcoin’s SF ratio accelerates with each four-year halving.

The next Bitcoin halving is estimated to take place in 2024. Once it occurs, the SF ratio for Bitcoin will increase, as noted, to approximately 120.

Bitcoin’s increasing SF ratio will accurately indicate more scarcity, which in turn will imply a higher value.

Using the Bitcoin Stock-to-Flow Model for Price Prediction

PlanB researched this stock-to-flow ratio and ran a regression analysis against Bitcoin’s price history. In other words, he researched how the price and stock-to-flow model overlapped to see if there was any correlation.

His findings were remarkable. He discovered that Bitcoin’s price was modeling — and closely following — a formula that included Bitcoin’s stock-to-flow ratio.

When you inspect this formula, the only variable is the stock-to-flow ratio. (The letter 

.) Technically, this ratio increases slightly every day as new Bitcoin is added to the stock. It is this small increase in the daily SF ratio which drives the model price higher.

Then, every four years, the SF ratio makes a drastic jump. When you graph this formula, it looks something like this:

The chart above takes the model price formula and smoothes it out by applying a 463-day simple moving average.

Notice the scale of pricing on the left-hand side. After each halving, the model price for Bitcoin jumps higher by an order of magnitude, then settles into a sideways consolidation.

As the SF ratio jumps, the model price for Bitcoin jumps, too. This illustrates how the scarcity of a valuable product has an impact on its price.

Now, let’s overlay the actual price of Bitcoin since its inception.

The overlap is quite impressive, as the price of Bitcoin has tracked the model fairly well. In its early days, there was limited trading, and access to Bitcoin was very difficult to obtain.

Now, several crypto exchanges have come online, making the acquisition and trading of Bitcoin much easier.

One thing to notice when reviewing the chart above is that price doesn’t precisely follow the model. There are times when the price overshoots the model to the upside. Then, the price will undershoot the model to the low side.

Some traders compare the price of Bitcoin to its model to determine if Bitcoin is overvalued and expensive, or undervalued and cheap.

Currently, the model suggests the price of Bitcoin should be around $107K. At the time of this writing, on Oct. 19, Bitcoin is trading near $62K, which is almost half of its modeled price. As a result of this discrepancy, some traders may conclude that the price of Bitcoin is extremely undervalued and cheap.

On the chart above, the orange line shows the actual price deviation from the model price. When the orange line is above the green line, it shows the actual price is above the model price. When the orange line is below the green line, the actual price is underperforming relative to the model.

Traders may interpret this to mean that the model has worked in the past, but is starting to break down as a predictor of price. The recent underperformance has placed Bitcoin the farthest below the model price in its history. Ultimately, it’s up to you to do your own research and arrive at your own conclusion.

Problems with the Bitcoin Stock-to-Flow Model

The Bitcoin SF model has done a fantastic job of describing Bitcoin’s past price history and demonstrating why Bitcoin has been valued at high prices relative to 10 years ago. Will the model last forever? Will this model accurately forecast the price of Bitcoin years into the future?

Let’s unpack a couple of blind spots that may break the model, making it a poor predictor of future price action. 

Bitcoin’s issuance schedule and relative scarcity aren’t the only reasons for its rise in price. Demand also plays a factor in the network’s value.

Consider that there are several blockchain platforms, such as Litecoin and Cardano with similar structures and issuance schedules. These blockchains’ currencies have scarcity with limited supply and decreasing production schedules. However, their SF models don’t accurately forecast prices for these blockchains. 

The prices of these cryptocurrencies don’t match the SF model because the demand to buy into those blockchains is significantly lower than that for the original Bitcoin. Therefore, if events were to unfold that negatively affect the demand for Bitcoin, then the value of Bitcoin would decouple from the SF valuation model.

Problem 2: Gold’s Stock-to-Flow Doesn’t Drive Its Price

As a result of Bitcoin’s periodic halving, its stock-to-flow ratio regularly jumps. It’s reasonable to assume that a contracting supply would fuel Bitcoin’s dramatic price increase.

Intuitively, this makes sense. We experienced a little bit of a supply shortage during the pandemic in March 2020 when 

 suddenly became scarce. As rumors swirled about a potential TP shortage, people began to buy it up — even if they didn’t need it. That additional demand further exacerbated the shortage.

However, it was the short supply that fueled an increase in demand. If a simple supply cut and the SF ratio were great price predictors, then gold analysts would be using them all the time.

The reality is that non-professional investors didn’t begin to hear about the concept of stock-to-flow ratio until PlanB’s research burst onto the scene.

, the price of gold is uncorrelated to its SF ratio:

Leaning on the long history of gold suggests that stock-to-flow is not an accurate predictor of price for it. Therefore, it can be argued that stock-to-flow is not a predictor for the value of Bitcoin, either.

Problem 3: SF Ratio Doesn’t Explain Price for Other Cryptos

If the stock-to-flow ratio were the most important driver in a cryptocurrency’s value, then why not create another crypto that’s scarce, and halves every month? The reason this hasn’t happened is that the SF ratio isn’t the main driver of a cryptocurrency’s value.

We can also lean on current examples like 

, which are replicas of Bitcoin but do not enjoy the same valuations.

Problem 4: Buying Power Needs to Grow Exponentially

Bitcoin Stock-to-Flow Model: Will Scarcity Help Retain BTC’s Long-Term Value?

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