How one Dutch hedge fund manager has accurately predicted the price of bitcoin

The most authoritative estimate of bitcoin’s current and potential future value I have seen comes from a Dutch quantitative investment manager. Known only as PlanB on Twitter he has provided a way of valuing bitcoin (and indeed precious metals like gold and silver) based on the stock-to-flow (SF) ratio.

The ‘stock’ is the size of the existing reserves (the amount of gold held in bank vaults or the number of bitcoin ever mined). The ‘flow’ is the yearly production. The SF ratio is stock / flow.