TechFlow News — According to a report by Cointelegraph, a research team from ByteTree has challenged the validity of Bitcoin's Stock-to-Flow (S2F) ratio model. Previously, this model predicted that Bitcoin would surpass $100,000 within a year. Charlie Morris, co-founder of ByteTree, noted that the S2F model has been used for decades to forecast prices of commodities such as gold and silver. When applied to Bitcoin, its inflation rate—or "flow"—gradually decreases, causing the stock-to-flow ratio to rise over time, leading to extremely optimistic price projections. However, Morris argues that Bitcoin’s price is not solely governed by supply-side economics. He explains that in markets, adjustments occur on both sides—supply and demand—until a new equilibrium is reached. Since Bitcoin’s supply is fixed, it is the demand side that ultimately determines price. Morris also points out another flaw in the S2F model: its overemphasis on newly mined coins' impact on price. Furthermore, he notes that the model fails to account for Bitcoin’s actual adoption rate.
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