Explore Vulcan Forged (PYR), a leading web3 ecosystem with gaming, NFTs, metaverse, and its own L1 blockchain, Elysium. Discover what sets it apart.

Vulcan Forged started out as a gaming hub targeting 

 users who could access play-to-earn (P2E) games on it that are powered by 

 blockchains. However, over time, Vulcan Forged has evolved into an all-encompassing blockchain and web3 platform. It now offers Elysium (a Layer 1 blockchain), a 

 (NFT) projects, and Vulcan Studios for developing mobile and PC web3 games.

Let's explore the Vulcan Forged web3 ecosystem and learn why it's definitely a project to watch in the busy web3 space.

, a blockchain-powered gaming ecosystem, offers comprehensive solutions to web3 users, suited to all gaming needs.

Founded in 2019 by a team led by current CEO and founder Jamie Thomson, Vulcan Forged started out as a gaming hub in which users could access NFT-powered web3 games. However, with Thomson at the helm, Vulcan Forged has transitioned into a full-fledged blockchain ecosystem that’s designed to solve the challenges faced by web3 users, such as high fees, slow transaction times and user-unfriendly gaming interfaces.

At the core of its comprehensive ecosystem is Elysium, a 

 designed specifically to power gaming and the metaverse. By leveraging the Elysium blockchain, Vulcan Forged is better positioned to offer enhanced functionalities, such as dynamic NFTs, an advanced suite of tools and a more immersive gaming experience.

Vulcan Studios, part of the Vulcan Forged ecosystem, supports the development of blockchain games. Several enhancements to Vulcan Studios now provide for an interconnected universe for gamers, a critical move in the platform's bid to become a more unified gaming ecosystem.

Vulcan Forged NFT marketplaces like Agora and Cedalion offer users a seamless experience in trading and creating digital assets. In particular, Agora provides a user-friendly interface for minting NFTs without gas fees that makes it accessible for creators and collectors alike.

Furthermore, the Vulcan Forged team has announced that VulcanX, its 

 (CEX), is almost complete. VulcanX will provide the platform's users with a gamified trading experience in which landholders In its ecosystem will share in generated revenue.

The entire Vulcan Forged ecosystem is governed by a dual-token economy consisting of PYR and ELY (previously LAVA) tokens.

 blockchain developed by Vulcan Forged that’s designed to power the future of web3 gaming, NFTs and 

 (DApps). Created with developers and users in mind, Elysium combines scalability, high throughput and a strong sustainability ethos to deliver a robust and eco-friendly blockchain ecosystem.

 (EVM) framework, Elysium supports fast, low-cost transactions, and is fully compatible with both Ethereum-based and Substrate-based tools. Its interoperability makes it an ideal platform for developers looking to deploy DApps, launch NFT collections or create gaming projects with dynamic on-chain mechanics.

A standout aspect of Elysium is its growing ecosystem of integrated tools, such as:

In addition to its robust technology, Elysium is central to the larger Vulcan Forged vision of a unified digital universe. It underpins diverse applications, including Vulcan’s NFT marketplaces, upcoming CEX and multi-game metaverse.

With an emphasis on accessibility, innovation and real-world use cases, Elysium is positioning itself as the core infrastructure for the mission Vulcan Forged has to merge gaming, blockchain and digital ownership into one immersive ecosystem.

In order to lower barriers to entry through enhanced user experience, Elysium offers three protocols that work together seamlessly to benefit web3 individuals and businesses. These protocols simplify the process of converting tokens, while offering fee delegation and allowing users to utilize any token in their wallets when transacting.

Vulcan Forged has created a comprehensive ecosystem to enhance web3 user experiences. Apart from the Elysium blockchain discussed above, other key components of the Vulcan Forged ecosystem are as follows.

Vulcan Studios is a gaming development platform designed to facilitate the creation, development and playing of PC and mobile games. In the revamped Vulcan Forged road map, these studios’ DeFi games are undergoing various enhancements to improve user experience.

Some of the notable games produced by Vulcan Studios include 

Vulcan Verse, Vulcan Runner, Berserk, Vulcan’s Creed

​MetaScapes is an innovative metaverse-as-a-service (MaaS) platform that empowers users to create and customize their own digital realms. Offering four distinct worlds — Fantasy, Cartoon, Urban and Futuristic — MetaScapes provides a versatile environment for creativity and exploration. Its users can personalize their avatars, design unique landscapes and even monetize their creations through in-world economies. 

With features like VR compatibility and AI assistance, MetaScapes aims to deliver an immersive and user-friendly experience, bridging the gap between imagination and digital reality.

The Vulcan Forged platform is powered by a dual token economy that consists of PYR and ELY tokens, each one playing a distinct role on the platform.

PYR is the primary token of Vulcan Forged. Initially, PYR was powered by the Ethereum and Polygon blockchains, but it’s now primarily powered by the Elysium blockchain. PYR plays three major roles on the platform: gaming, settlement and 

. It has a total supply of 50,000,000 tokens, with a circulating supply of 23,897,700 (as of May 15, 2025).

The primary use cases of the PYR token are as follows:

The second token on Vulcan Forged is ELY, which was formerly known as LAVA. ELY is Elysium's native and gas token. It also features many other uses, such as powering transactions and rewarding gameplay on Vulcan Forged games. You can earn ELY by participating in various games and accumulating XP points on the platform. Additionally, you can generate ELY tokens as rewards for holding PYR.

ELY’s total supply is 1 million tokens. Some uses of ELY include:

You can buy PYR on Bybit as the PYRUSDT Perpetual contract, with leverage of up to 12.5x. It's listed in Bybit's Innovation Zone, which gives you access to handpicked projects with a potential for high returns (also with higher fees and risk).

Vulcan Forged (PYR) crypto price prediction

As of May 15, 2025, PYR is priced at $1.34, 97.3% higher than its all-time high of $49.24 on Dec 1, 2021 and 51.8% higher than its all-time low of $0.88 on Apr 7, 2025.

Price prediction experts are cautiously bullish on PYR's future price. CoinCodex predicts that PYR 

 a maximum price of $1.49 in 2027 and increase to $4.43 in 2030. Meanwhile, DigitalCoinPrice is relatively more bullish on PYR, and expects that the token 

 a maximum price of $4.85 in 2027 and surge to $7.34 in 2030.

While these forecasts are bullish, they aren’t financial advice and they don’t guarantee the future price of PYR. We highly recommend that you 

 before you invest in Vulcan Forged or any other cryptocurrencies.

Vulcan Forged (PYR) is shaping the expanding universe of web3 gaming by merging cutting-edge technology with immersive player experiences. From its native Elysium blockchain to dynamic NFT ecosystems and the upcoming VulcanX decentralized exchange, the platform is setting new standards in decentralization, creativity and scalability.

Featuring a unified road map, tools like MetaScapes, NFT marketplaces, and Elysium Swap, Bridge and Scan, Vulcan Forged is building more than games — it’s forging a sustainable digital economy. As its ecosystem grows, PYR, its cross-platform utility token, remains at the heart of this transformation, empowering game developers, creators and players in the next era of decentralized entertainment. 

Intermediate

Vulcan Forged (PYR).png

Vulcan Forged (PYR): The expanding universe of web3 gaming and beyond

Discover MapleStory Universe, Nexon's blockchain-powered version of the iconic MMORPG game loved by over 250 million players. Learn more about the launch of MapleStory N on May 15, the NXPC token and how to trade NXPC on Bybit.

, a simple, 2D MMORPG that quickly became a cultural phenomenon. Its blocky characters and iconic town of Henesys were etched in the memories of over 250 million players who played the game worldwide. Now, Nexspace, an Abu Dhabi–based subsidiary of Nexon, is recreating this world on-chain with MapleStory Universe. 

At its core, MSU is a faithful recreation of 

s legacy. It revives the beloved characters, art styles and lore while simultaneously improving the game by integrating blockchain technology. Nexpace believes this integration will transform the franchise from a centralized ecosystem into a player-owned universe, creating a win-win scenario for both the original players and web3 natives. 

 IP is already an established success, with 250 million players and over $5 billion in revenue. MapleStory Universe aims to bring its enormous player base into MSU through various incentives, such as cross-platform progression and exclusive rewards for legacy users. 

Behind all of this development is Nexpace, the blockchain-focused subsidiary of Nexon established in 2023. Sun Young Hwang is the CEO of Nexpace and a leader at MapleStory Universe. With 15 years of experience at Nexon, Hwang brings a wealth of expertise and a clear vision for the ecosystem’s growth in the web3 space. 

As part of its mission to launch a gaming universe, Nexpace teams announced 

, the first standalone game of the MapleStory Universe. It’s a PC-based MMORPG with onchain item ownership. The game is set for a global launch on May 15, 2025, and is currently available for 

. According to BlockchainGamer.biz, the game was so popular that it 

 players can issue, trade and manage in-game 

. Post-launch, the community can collaborate on content development, influencing the game’s evolution through creator tools. 

, a blockchain tailored for gamers. Built on 

, it combines Nexon’s 20-plus years of anti-cheat expertise with 

’s tamperproof randomness (critical for fair loot boxes). Transactions are free, fast and invisible during gameplay. No crypto wallets are required upfront. For 

 veterans, this offers a smooth gateway into web3, and for crypto natives, it brings a beloved gaming franchise on-chain.

Blockchain's role in the MapleStory Universe

The Henesys blockchain plays a crucial role in MSU’s development and execution. It provides sub-second finality and support for thousands of 

 (TPS), ensuring gameplay remains fluid and uninterrupted.

On top of that, the use of blockchain also enables players to own and trade in-game assets as NFTs. These NFTs are designed to be interoperable across every game that’s built in the MapleStory Universe, providing increased utility and value for these digital assets.

The game’s economy also relies on the decentralized nature of blockchains to create an ever-changing world. It incentivizes creators to design unique planets, each with its own tailored gameplay and social experiences, and rewards them with NXPC tokens for their contributions. 

NXPC is the native utility token of MapleStory Universe, with a fixed supply of 1 billion. It functions as the reserve currency of the universe, and is used to link gameplay assets to the border ecosystem. 

The token’s initial distribution also reinforces its decentralized nature, as 80% of NXPC is reserved for contributor reward, with just 0.696% allocated for the team and 0.4% for advisors,

Additionally, the team and advisors allocations also have vesting requirements. The team token has a structured vesting schedule with a 9-month cliff, followed by quarterly unlocks over the next three years. For advisors, there’s a 12-month cliff, followed by milestone-based vesting. 

MSU’s franchise has generated $5 billion in revenue since 2003. The organization behind the game is focused on longevity, as opposed to a quick money grab. Crucially, blockchain technology has matured to an extent where it can deliver seamless gameplay, matching the smooth experience players expect from traditional platforms. 

 starting on May 15, 2025. From now through May 28, 10AM UTC, new and existing Bybit users can stand a chance to win from a prize pool of 9,000,000 NXPC by 

. Register for this event at Bybit Token Splash 

Beginner

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Nexpace (NXPC): MapleStory IP goes web3

The Ethereum Foundation has launched the Trillion Dollar Security Initiative, aiming to elevate Ethereum’s security beyond the crypto ecosystem to rival global legacy systems. 

The S&P 500 edged up 0.1%, lifted by tech gains from Nvidia and AMD, despite broader sector losses. Gold dropped below $3,200 as easing US-China trade tensions and rising Treasury yields reduced safe-haven demand, despite softer inflation data. Traders await US PPI and retail sales for further cues. The Coindesk Indices, which tracks the broader crypto market, down 1.64%, with Bitcoin and Ether down 1.47% and 3.35%, in the past 24 hours. Trade these markets and more with up to 500x leverage on Bybit MT5 using this 

Today's top performer is ATH, which rose 15.2% after Aethir boosted conversions with its instant play decentralized cloud gaming solution.

Aethir (ATH), founded in 2021, is a decentralized GPU cloud platform that provides scalable computing power for Web3 applications like gaming, AI, and design, enabling businesses to run high-performance tasks without centralized infrastructure. 

 boosts gaming user acquisition by enabling instant play without downloads, reducing costs and improving conversion. In a case study with SuperScale, games using Aethir’s tech saw a 45% higher conversion rate, 93% higher ARPU, and 43% more users preferring instant play over downloads. By bypassing app store fees and offering seamless gameplay access, Aethir provides studios with a cost-effective, high-conversion alternative to traditional mobile gaming funnels.

Check out the latest prices, charts, and data of 

The Ethereum Foundation has launched the 

, aiming to elevate Ethereum’s security beyond the crypto ecosystem to rival global legacy systems. The initiative will (1) map Ethereum’s security landscape, (2) execute key improvements across its stack—from wallet UX to consensus, and (3) improve communication around Ethereum's security standards. Led by EF’s Fredrik Svantes and Josh Stark, with support from security experts samczsun, Mehdi Zerouali, and Zach Obront, the initiative seeks broad ecosystem input to achieve a world where trillions in value can be securely held onchain.

Yesterday, BTC spot ETFs saw $86.6 million in net inflows, all from non-GBTC funds, while GBTC recorded no flow.

, rewarding whitelisted participants with 100 xpSPON for completing simple tasks like following on X and joining Discord. xpSPON will directly impact your future SPON airdrop allocation — the more you earn, the greater your rewards.

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Ethereum Foundation launches initiative to bring trillion-dollar security onchain

Diversification reduce reliance on any single market, ensuring stability during downturns. Here are the top 5 ways to diversify your portfolio.

Imagine watching the market crash while your portfolio stays steady — not because you predicted the dip, but because you built a strong defense against it. 

 is a time-tested financial safeguard in unpredictable markets. By balancing various assets, such as crypto, commodities, 

 and international stocks, investors can weather 

 and seize opportunities. So, how do you diversify effectively without overcomplicating things? This article explores the top expert strategies, and some common pitfalls to avoid.

 strategy that spreads investments across different asset classes, sectors or countries to reduce exposure to any single asset or risk. This approach aims to stabilize returns by cushioning the impact of market volatility on your overall portfolio.

Why is portfolio diversification important?

The age-old advice not to “put all your eggs in one basket” holds true when it comes to investing, and it’s a simple but powerful way to protect your wealth. Diversification helps safeguard your capital by spreading your investments across different assets so that when one underperforms, others may help offset the loss. This strategy is especially important for people nearing retirement, or for anyone who values financial stability.

By investing across various asset classes — such as stocks, bonds and real estate, as well as different industries and geographic regions — you build a portfolio that’s more resilient to economic ups and downs. But beyond just reducing risk, diversification often leads to better risk-adjusted returns and less day-to-day volatility, for an investment experience that’s less stressful overall. Moreover, because not all investments will dip at the same time, investors don’t continually have to monitor everything in their portfolios.

Diversification can also help guard against inflation, thanks to assets that tend to perform well when prices rise. At the same time, it opens the door to opportunities in growing markets, all while keeping your investment approach balanced and aligned with your long-term financial goals.

Top 5 tips for diversifying your portfolio

Here are five smart ways to diversify your investments and protect your future returns.

Tip 1: Spread investments across asset classes

Spreading your investments across different asset classes, such as stocks, bonds, real estate, cryptocurrencies and commodities, helps ensure your portfolio isn’t overly exposed to the risks of any single market segment. This makes your investments more resilient. Different assets often react differently to market conditions, so when one asset underperforms, others may perform better, balancing your overall returns (as well as your risks).

Assuming you invest solely in stocks, and the stock market declines, your entire portfolio may suffer. However, if you also hold bonds, which often perform well when stocks decline, any blow to your portfolio can be softened.​

Don’t just buy one type of stock or bond. Within each asset class, invest in a mix of sectors (such as technology, healthcare and energy), company sizes (large-cap, mid-cap and small-cap) and styles (growth, value and dividend). This approach further reduces the risk that poor performance in one area or industry will drag down your entire portfolio.

If you invest heavily in the technology sector and it experiences a downturn, your portfolio could suffer accordingly. Diversifying into other sectors like healthcare or consumer goods can help balance your investments’ performance.​

Tip 3: Low-cost index funds and ETFs for instant diversification

 (ETFs) offer a ready-made way to achieve diversification. They provide exposure to a broad range of assets or sectors, often at a lower cost than actively managed funds. This approach simplifies diversification, and can be more accessible for individual investors, especially beginners. It's an efficient way to diversify quickly and easily, as each fund typically holds dozens or even hundreds of underlying securities.

For instance, investing in an S&P 500 index fund gives you exposure to 500 large US companies, providing instant diversification across various industries.​

​Expanding your portfolio to include international assets can enhance diversification and provide exposure to growth opportunities beyond your home country. Investing globally can help mitigate risks associated with domestic economic downturns, as different regions may experience varying economic cycles.​

 their US counterparts in the first quarter of 2025. This outperformance was attributed to strong corporate earnings, increased defense and infrastructure spending in Europe, and the absence of direct US tariffs targeting European goods. Despite initial skepticism, European stocks rose by 10–12%, even as US markets declined somewhat, thus helping to stabilize global portfolio returns for investors with international diversification

However, investors must be mindful of currency exchange risks. Fluctuations in exchange rates can impact the value of international investments. For instance, if you invest in a European company and the euro depreciates against the US dollar, the value of your investment in dollar terms may decrease even if the company's performance remains strong.

Diversification isn’t a one-time task. Over time, some investments may grow faster than others, skewing your original allocation. Regularly reviewing and rebalancing your portfolio ensures it stays aligned with your 

 and investment goals, maintaining the benefits of diversification while improving long-term performance.

Let’s say your target allocation is 60% stocks and 40% bonds, but stocks perform well and grow to 70% of your portfolio. In this case, rebalancing would involve selling some stocks and buying bonds to return to your original allocation.​

Common portfolio diversification mistakes to avoid

Avoiding these common diversification mistakes can help you build a stronger, more resilient portfolio:

How to diversify your portfolio with Bybit

Bybit is a leading crypto exchange that offers a wide range of products designed to help you diversify across cryptocurrencies, traditional assets and innovative financial instruments. Following are some of the many products and services that Bybit offers.

Portfolio diversification is a key strategy for reducing risk by spreading investments across different asset classes, sectors and regions. Achieving this goal, however, requires a balanced and disciplined approach to ensure resilience and long-term growth. Bybit helps simplify this process with powerful tools like MT5 trading, Copy Trading and Structured Products. These tools allow investors to diversify their portfolios more effectively, providing access to diverse markets and strategies while also minimizing risk. 

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Top 5 tips to diversify your portfolio

Investing

Trading

Bitcoin

Bitcoin stock-to-flow model measures Bitcoin's value through the rate of stock production and the scarcity of the resource. But is it accurate for price prediction? Find out more.

The cryptocurrency market is in its infancy and experiencing high growth. Due to its novelty, investors and traders have been looking for long-term valuation models to determine the appropriate prices for Bitcoin and other cryptos. Since Bitcoin’s total supply is limited and predicted to be mined out by 2140, one can’t help but wonder if Bitcoin’s price will continue to rise due to its absolute scarcity. One such quantitative model called the stock-to-flow model measures the Bitcoin value and predicting Bitcoin’s price over an extended period. 

We’ll look at what the stock-to-flow model is and make a comparison between the stock-to-flow of both 

. Then, we’ll unpack a model that incorporates the stock-to-flow ratio for Bitcoin and predicts its price. Lastly, we’ll discuss some problems that may prevent this model from being an accurate predictor of Bitcoin’s future.

Stock-to-flow is an investment model that measures an asset’s current stock against the rate of production or the total amount mined over the course of a year. Stock-to-flow is used to compare the relative abundance or scarcity of a particular resource.

In theory, if a resource is more scarce — for instance, precious metals such as gold, silver or platinum — then it’s likely to be a better store of value, meaning that it should retain its value and purchasing power over the long term. Beyond natural resources, other commodities such as real estate, stocks and bonds have traditionally been used as stores of value, too.

Though traditionally used as a way to compare various established resources, stock-to-flow has been adapted as a way to valuate Bitcoin, the first scarce digital resource that’s believed to be a store of value.

Valuing Bitcoin using the stock-to-flow model began with a pseudonymous author, PlanB. In his article, 

, the author explains how the flow model makes sense for an asset like Bitcoin through the highlights of the statistically significant relationship between the circulating scarcity and its impact on price.

PlanB argues that Bitcoin can be valued as a scarce resource because it contains “unforgeable costliness.” To 

, massive amounts of electricity are required at a considerable monetary cost. The author argues that these properties push Bitcoin into a group of scarce assets that can be relatively valued using the stock-to-flow model.

This is different from valuating traditional fiat currency because centralized authorities can decide to create more fiat. Fiat currency isn’t scarce and is theoretically available in unlimited supply. Bitcoin, however, has over $18 million of existing supply out of the capped 

 of 21 million, which will be mined by 2140.

The protocol behind Bitcoin is written such that no more Bitcoins will be mined or created once those 21 million have been brought into existence.

Due to the open-source code of Bitcoin, we know that Bitcoin’s rate of production is always decreasing. Every 210,000 blocks, or about every four years, the network goes through a halving process. This means the amount of Bitcoin a miner receives as a reward for validating a block is cut in half. This 

 entails that the production of new Bitcoin becomes smaller every four years.

This has a fairly immediate impact on the Bitcoin value, as the stock-to-flow ratio increases at each halving — creating an even scarcer resource.  

The stock-to-flow ratio is a straightforward calculation.

In this case, stock represents the current availability of the resource. Using gold as an example, its stock would include how much gold has already been mined

The flow would represent the new gold being mined. Generally, the stock-to-flow ratio is measured on a 12-month basis. Therefore, its flow would represent how much mining is expected to take place over the next 12 months.

For Bitcoin, stock would include the amount of Bitcoin which has already been mined to date, and flow would refer to the amount of Bitcoin being mined over the next 12 months.

Since Bitcoin’s code is open-source, anyone who can read computer code can see how Bitcoin works. As a result, we know exactly how much Bitcoin exists at this moment. Additionally, we know when, and how much, new Bitcoin is created — identifying the supply scarcity.

 have been mined. The average time for the production of a new block in the Bitcoin blockchain takes around 10 minutes. As an incentive for the mining efforts, miners are rewarded 6.25 BTC whenever they add a new block of transactions into the blockchain. 

This means that 6.25 BTC are created every 10 minutes.  

That’s 37.5 BTC (6.25/10 minutes × 60 minutes/hour) created every hour, and 900 BTC (37.5/hour x 24 hours/day) created daily.

Therefore, the current annual flow of Bitcoin is 900/day x 365.25 days per year = 328,725 BTC.

As of fall 2021, the circulating supply of BTC was 18.8 million. There is a flow of 0.33 million bitcoins (328,725 ÷ 1,000,000).

This gives Bitcoin a current stock-to-flow ratio of 18.8 million ÷ 0.33 million = 57.

Every four years, the number of bitcoins mined is halved. At the time of this writing, a miner receives 6.25 bitcoins as a reward for mining each block. When the next halving occurs in 2024, the mining reward will be reduced to 3.125, which means the rate of new Bitcoin being created after that time will be reduced by 50%.

This inevitably and consistently reduces the flow portion of the ratio. When you reduce the denominator of a ratio, it increases the total value of the ratio.

As a result, Bitcoin’s SF ratio will increase significantly at the next halving in 2024, driving it to a ratio of nearly 120.

A low stock-to-flow ratio suggests there’s a lot of new production relative to the current stock available. This implies the inflation of the resource is likely to be strong. When a product is heavily inflated, the price to buy that product lowers significantly.

Fortunately for Bitcoin, its S2F ratio is unlikely to shrink. This is because the numerator of the ratio is steadily increasing each year. The denominator of the ratio will shrink every four years. As a result, the resulting S2F ratio continues to grow.

Gold vs. Bitcoin Stock-to-Flow Models: The Differences

There are several fundamental differences between the SF ratios of gold and Bitcoin.

The current SF ratio for gold is near 62.

As you recall, the current SF ratio for Bitcoin is near 57.

The similarity of these SF ratios indicates the scarcity of these two resources, meaning that they’re excellent stores of value.

Though these ratios are relatively close together, there is a notable difference: Gold’s SF ratio has fluctuated over the past 100 years.  

Since 1900, gold’s SF ratio has bounced between 45 and 90. This is largely a result of the production rate increasing and decreasing over time based on market conditions.

On the other hand, Bitcoin’s mining schedule is systematic and known in advance. Production of new Bitcoin will decrease by 50% every four years. This means that Bitcoin’s SF ratio accelerates with each four-year halving.

The next Bitcoin halving is estimated to take place in 2024. Once it occurs, the SF ratio for Bitcoin will increase, as noted, to approximately 120.

Bitcoin’s increasing SF ratio will accurately indicate more scarcity, which in turn will imply a higher value.

Using the Bitcoin Stock-to-Flow Model for Price Prediction

PlanB researched this stock-to-flow ratio and ran a regression analysis against Bitcoin’s price history. In other words, he researched how the price and stock-to-flow model overlapped to see if there was any correlation.

His findings were remarkable. He discovered that Bitcoin’s price was modeling — and closely following — a formula that included Bitcoin’s stock-to-flow ratio.

When you inspect this formula, the only variable is the stock-to-flow ratio. (The letter 

.) Technically, this ratio increases slightly every day as new Bitcoin is added to the stock. It is this small increase in the daily SF ratio which drives the model price higher.

Then, every four years, the SF ratio makes a drastic jump. When you graph this formula, it looks something like this:

The chart above takes the model price formula and smoothes it out by applying a 463-day simple moving average.

Notice the scale of pricing on the left-hand side. After each halving, the model price for Bitcoin jumps higher by an order of magnitude, then settles into a sideways consolidation.

As the SF ratio jumps, the model price for Bitcoin jumps, too. This illustrates how the scarcity of a valuable product has an impact on its price.

Now, let’s overlay the actual price of Bitcoin since its inception.

The overlap is quite impressive, as the price of Bitcoin has tracked the model fairly well. In its early days, there was limited trading, and access to Bitcoin was very difficult to obtain.

Now, several crypto exchanges have come online, making the acquisition and trading of Bitcoin much easier.

One thing to notice when reviewing the chart above is that price doesn’t precisely follow the model. There are times when the price overshoots the model to the upside. Then, the price will undershoot the model to the low side.

Some traders compare the price of Bitcoin to its model to determine if Bitcoin is overvalued and expensive, or undervalued and cheap.

Currently, the model suggests the price of Bitcoin should be around $107K. At the time of this writing, on Oct. 19, Bitcoin is trading near $62K, which is almost half of its modeled price. As a result of this discrepancy, some traders may conclude that the price of Bitcoin is extremely undervalued and cheap.

On the chart above, the orange line shows the actual price deviation from the model price. When the orange line is above the green line, it shows the actual price is above the model price. When the orange line is below the green line, the actual price is underperforming relative to the model.

Traders may interpret this to mean that the model has worked in the past, but is starting to break down as a predictor of price. The recent underperformance has placed Bitcoin the farthest below the model price in its history. Ultimately, it’s up to you to do your own research and arrive at your own conclusion.

Problems with the Bitcoin Stock-to-Flow Model

The Bitcoin SF model has done a fantastic job of describing Bitcoin’s past price history and demonstrating why Bitcoin has been valued at high prices relative to 10 years ago. Will the model last forever? Will this model accurately forecast the price of Bitcoin years into the future?

Let’s unpack a couple of blind spots that may break the model, making it a poor predictor of future price action. 

Bitcoin’s issuance schedule and relative scarcity aren’t the only reasons for its rise in price. Demand also plays a factor in the network’s value.

Consider that there are several blockchain platforms, such as Litecoin and Cardano with similar structures and issuance schedules. These blockchains’ currencies have scarcity with limited supply and decreasing production schedules. However, their SF models don’t accurately forecast prices for these blockchains. 

The prices of these cryptocurrencies don’t match the SF model because the demand to buy into those blockchains is significantly lower than that for the original Bitcoin. Therefore, if events were to unfold that negatively affect the demand for Bitcoin, then the value of Bitcoin would decouple from the SF valuation model.

Problem 2: Gold’s Stock-to-Flow Doesn’t Drive Its Price

As a result of Bitcoin’s periodic halving, its stock-to-flow ratio regularly jumps. It’s reasonable to assume that a contracting supply would fuel Bitcoin’s dramatic price increase.

Intuitively, this makes sense. We experienced a little bit of a supply shortage during the pandemic in March 2020 when 

 suddenly became scarce. As rumors swirled about a potential TP shortage, people began to buy it up — even if they didn’t need it. That additional demand further exacerbated the shortage.

However, it was the short supply that fueled an increase in demand. If a simple supply cut and the SF ratio were great price predictors, then gold analysts would be using them all the time.

The reality is that non-professional investors didn’t begin to hear about the concept of stock-to-flow ratio until PlanB’s research burst onto the scene.

, the price of gold is uncorrelated to its SF ratio:

Leaning on the long history of gold suggests that stock-to-flow is not an accurate predictor of price for it. Therefore, it can be argued that stock-to-flow is not a predictor for the value of Bitcoin, either.

Problem 3: SF Ratio Doesn’t Explain Price for Other Cryptos

If the stock-to-flow ratio were the most important driver in a cryptocurrency’s value, then why not create another crypto that’s scarce, and halves every month? The reason this hasn’t happened is that the SF ratio isn’t the main driver of a cryptocurrency’s value.

We can also lean on current examples like 

Bitcoin Stock-to-Flow Model: Will Scarcity Help Retain BTC’s Long-Term Value?

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Bitcoin Stock-to-Flow Model: Will Scarcity Help Retain BTC’s Long-Term Value?

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