Assessing the fair value of Bitcoin using Stock-to-Flow model

global interest in cryptocurrencies as investment instruments is rapidly increasing, increasingly opening up prospects for their use as reserve assets by state institutions. Against this backdrop, the need arises for more accurate methods to evaluate the value of such digital assets. This article examines the Stock-to-Flow model as a fundamental approach to assessing the value of Bitcoin, with particular emphasis on its applicability and accuracy under current market conditions. Historical data analysis shows that starting from the fourth halving, the classic model begins to systematically overestimate the expected price of the asset, despite accurately reflecting Bitcoin’s underlying cyclical patterns. As a scientific contribution, a modification of the classical Stock-to-Flow model is proposed: by smoothing time series, applying seasonal decomposition, and isolating the cyclical component, a more moderate growth curve is formed. This new model, while preserving the Stock-to-Flow framework, provides a more balanced prediction of Bitcoin’s long-term value dynamics. Consequently, the resulting modification can serve as a more reliable tool for medium- and long-term cryptocurrency price forecasting.

Bitcoin, digital currencies, cryptocurrency, stock-to-flow, blockchain