Bitcoin, stock to flow and efficiency market theory: how do they go together?

In the discussion about the course development after halving, two extreme opinions leave. On the one hand, many hope for new all-time highs thanks to the stock-to-flow ratio. On the other hand, investors believe that halving has already been priced in according to efficiency market theory. What does that mean and how does it fit together?

Like leap year jokes or sayings about the German national team, there is also a four-year seasonality in the Bitcoin ecosystem. I’m talking about halving. As was the case four years ago, it is now heard more often that the halving has already been “priced in”.


Priced Information: The Core of Efficiency Market Theory

Let’s start with the first two questions: “Priced in” is something when an event is reflected in the current course. If it is generally known that a bottle of cola will be twice as expensive as of tomorrow, this will be reflected in the current buying behavior – and thus also in the price. This development is even clearer on the financial markets, where the makers define the course by announcing offers. If takers respond to this, pricing takes place.