Re: Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
This model should suffice for an academics paper (at least in my country). However, it might not get an accurate result for forecasting. It still utilizes historical data, right?
For forecasting purposes, however, this model can be used as one out of many models and assumptions.
The good news is, as Satoshi said, if you can get enough people to believe this model, it will be a self-fulfilling prophecy.
Good news is: somebody already thought of it, and tested.
Actually the author himself did it.
What if, instead of using all the available data to fit the model, we use only the Oct yearly Data on 2009-2012 (4 points), so before the first halving? We use those 4 points we fit the model and then we compare it with the actual data 7 out of sample data points (Oct 2012- Oct 2019).
The result is the following:
Quote
The main model is fit on 111 monthly data points: $55K 95% R2.
This simple model is fit on only 4 Oct month data points: $100K 99.5% R2 and great out of sample fit.
This simple model is fit on only 4 Oct month data points: $100K 99.5% R2 and great out of sample fit.
https://twitter.com/100trillionUSD/status/1151952837607342080?s=20
99.5% means there's no chance the model is wrong about the correlation.