Stock-to-Flow Reversion measures the relative difference between the current market price and the price implied by the Stock-to-Flow model, producing a normalized indicator of whether the asset is trading at a premium or discount to its model-implied fair value at any given point in time.
When Stock-to-Flow Reversion exceeds 1, market price is trading above the Stock-to-Flow model's implied value - indicating overvaluation relative to the scarcity-based framework, historically associated with late-cycle euphoria where price momentum has outpaced the fundamental scarcity signal. Sustained readings above 1 have frequently preceded major corrections as price mean-reverts toward model-implied levels. When the value falls below 1, the asset is trading at a discount to its Stock-to-Flow implied price - historically a constructive signal indicating undervaluation relative to current scarcity levels.
Unlike the raw Stock-to-Flow Ratio which changes slowly and predictably with supply dynamics, the Reversion indicator captures the real-time relationship between price and model - making it a more actionable tool for identifying when market price has deviated meaningfully from scarcity-implied value in either direction. Tracked alongside MVRV, NUPL, and Puell Multiple, it adds a scarcity-grounded dimension to the broader suite of on-chain cycle valuation indicators.
