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Stock-to-flow
- Stock-to-flow (SF) in crypto evaluates the scarcity of assets like Bitcoin. It compares the existing supply (stock) to the new production rate (flow).
- Stock represents the total available asset amount, while flow denotes the annual production rate.
- The SF ratio is derived by dividing the current stock by the annual flow. For cryptocurrencies with capped supplies and predictable issuance, it serves as a measure of scarcity and a potential indicator of future value.
- A higher SF ratio indicates greater scarcity, potentially leading to increased value or price appreciation. It’s widely used in cryptocurrency analysis and forecasting due to its predictive nature.