Suorce: https://stats.buybitcoinworldwide.com/stock-to-flow/
Just compare the price action between the 2013 bull market top and the 2017 bull market top to the price action since the 2017 bull market top.
Isn't the increased volatility quite obvious? The 2019 summer top was clearly an attempt by the market to front run the coming bull market. Of course, it failed because it wasn't time, yet.
The stock-to-flow model makes for a less reliable support for the price going forward
Another important observation is obvious based on the price chart above. The price seems to have more trouble staying above the model price during each consecutive market cycle. In the years 2011, 2012, 2013, 2014 and 2015 the price hardly spent any time below the stock-to-flow model price.
In the next cycle, the price followed the curve rather faithfully, producing a clean blow off top in late 2017.
Increasing volatility means the market will always find ways to fuck with market participants
The 2017 top is when the volatility started increasing. The late 2018/early 2019 bottom was a deep bowl and it was followed by a premature but powerful front running event trying to price in the next cycle top. The Litecoin halving event was in the summer of 2019 but the event turned out to be meaningless from a price action point of view.
Then there was the Covid-19 crash in March 2020.
Notice how the clean multi-month Wyckoff distribution between February 2021 and May 2021 took the price to a level clearly below the stock-to-flow model price.
My prediction
I don't think there will necessarily be massive Bitcoin blow off top between $200,000 and $400,000 as the S2F model would suggest.
Frustrated Bitcoin investors might increasingly take their money to altcoins such as Ethereum and all the DeFi protocols on it and elsewhere.
There seems to be a shakeout in play. I will be carefully watching out for clear sings of Bitcoin bottoming out and having entered accumulation. Because the price action is more volatile now, which it has to be to get all the S2F believers to question their belief, the optimal time to invest is more of a matter of timing.