Bitcoin's math, not its mythology, is what pulled Daren Blonski into an obscure supply model early, and DACFP TV invited him on to break it down. Our Managing Principal joined Don Friedman, president of the Digital Assets Council of Financial Professionals, for a five-minute segment on the stock-to-flow model and how advisors can get client exposure to Bitcoin. "I came across the stock-to-flow model back, I think it was very early 2020," Daren says. "There's this kind of anonymous Twitter personality named Plan B, and he created what they call the stock-to-flow model." The model treats Bitcoin the way commodity markets treat gold, weighing what's already mined against what's still coming onto the market. "Because there's only 21 million ever to be mined, you can run back a calculation and see how much Bitcoin is going to come onto the market," he explains. "Every few years, give or take four years, the number of Bitcoin coming out every ten minutes gets cut in half, and that creates a constraining factor on mining and ultimately creates a supply shock to the market over time." Daren pushes back on the idea that Bitcoin is purely a cultural phenomenon. "A lot of the issues that financial advisors have with Bitcoin, a lot of the issues that anyone has with Bitcoin, is this idea that it's just a cyberpunk dream to create a digital currency that everyone can transact on the web," he says. "There's actually a lot more math to it, a lot more process to it, than one would believe just sitting around the barbecue talking about it." On how advisors can actually get exposure for clients, Daren walks through the tradeoffs: "There are a couple of proxies right now. One is GBTC, though there are trade-offs there with a discount or premium because it's an exchange-traded trust, and that creates a dislocation from the actual Bitcoin price. You could also take some access through the miners, or something like MicroStrategy as a leveraged option for getting access to Bitcoin. There are more ETFs coming out now too. But there's a lot evolving, a lot changing, and that's why position sizing is so critical in something like this."
Key Takeaways
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The stock-to-flow model applies commodity-market logic (comparing what's already mined to what's still coming) to project Bitcoin's price.
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Bitcoin's hard cap of 21 million coins, combined with a mining reward that halves roughly every four years, is engineered to create a supply shock over time.
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Bitcoin is often dismissed as a cultural fad, but the math and process behind it run deeper than casual conversation suggests.
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Advisors currently reach Bitcoin exposure for clients through proxies like GBTC, cryptocurrency miners, MicroStrategy, or newer ETFs, each with its own tradeoffs.
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With the crypto landscape and regulatory picture still evolving, disciplined position sizing matters more than picking the "right" proxy.
Working through which of these tools, if any, makes sense inside a client's broader plan is exactly the kind of conversation we have around our Investment Management services.
Find Daren's video and more on the Digital Assets Council For Financial Professionals here