GoldenNaim

Bitcoin Stock To Flow : Rainbow Indicator

BNC:BLX   BraveNewCoin Liquid Index for Bitcoin
Hello everyone,
I hope you are fine you and your family during this hard period.

I just finished to program ( and adjusted ) the Stock To Flow Indicator, rainbow version, created by PlanB / 100trillionUSD.

You can find it by searching " Bitcoin Stock To Flow Rainbow " in the indicators list.


What the hell is Stock to flow ?

I will use the words of the authors :
" SF = stock / flow
Stock is the size of the existing stockpiles or reserves. Flow is the yearly production.
Instead of SF , people also use supply growth rate (flow/stock). Note that SF = 1 / supply growth rate. "

With Bitcoin , we can know both of them :
  • Stock = How many Bitcoins are currently in circulation
  • Flow = How many Bitcoins are created each year

Halving history and those to come :
28/11/2012 : 25 Bitcoins each block - 150 / hour - 3600 / day - 1314000 / year
09/07/2016 : 12.5 Bitcoins each block - 75 / hour - 1800 / day - 657000 / year
11/ 05 /2020 : 6.25 Bitcoins each block - 32.5 / hour - 900 / day - 328500 / year ( ** estimation )
10/03/2024 : 3.125 Bitcoins each block - 16.25 / hour - 450 / day - 164250 / year ( ** estimation )
09/ 01 /2028 : 1.5625 Bitcoins each block - 8.125 / hour - 225 / day - 82125 / year ( ** estimation )

Okok... but, how it works ?

The mathematical formula used is: exp (-1.84) * (stock-to-flow^3.36) ( the rainbow line )
And the formula that I used for the top price line is : 1.2 * (stock-to-flow^3) ( the red line )

Then ?

Firstly, the rainbow line IS the prediction model.
Let's come to the color: each color indicates the time before the next halving.

This allows, at a glance, to know where we are on a time scale

What we can see :

First of all, the price follows, I would even say is attracted, by the rainbow line.
Then, when the price is found above the model, and even more when it approaches the red line, we can see that it's followed by a fall below the price model.

Finally, it is therefore interesting to see that, for the moment:

  • It's not good to buy when the price is above the rainbow line
  • The ATH is reached, 2 times out of 3, between 900 & 1000 days before the next halving
  • The Bottom is reached, between 400 & 600 days before the next halving
  • After each halving, the price keep growing to the rainbow line, small by small.

In conclusion, I think it can be said that the production of Bitcoin and the price of Bitcoin are intrinsically linked, in the long term.

Commentaires

nice work, thumbs up. But how can it show me the forecast to 2024? thanks alot for this nice indicator. mitch
+1 Répondre
@MiScha, Thank you ! Sadly, TradingView doesn't allow to draw after the last candle . I had to draw the continuation manually.
But, the rainbow line is updated at each new day ( like RSI, MACD... ) . After the 11 may, you will can see at each price is the rainbow line .
As we know the production of Bitcoin in advance by reading the source code, we can expect a rainbow line at around 88,000$ for the 12 may.
+2 Répondre
MiScha GoldenNaim
@GoldenNaim, ahhh ok, got it :) appreciate your awesome work.
+1 Répondre
God dammit, this is good stuff.
Répondre
I like your style. thanks for the post
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