This Metric Against Gold Signals Bitcoin (BTC) Market Cap Could Hit Over A Trillion By 2024

The price of Bitcoin (BTC) relative to other “store of value assets” such as gold, silver and palladium may be greatly undervalued according to the stock-to-flow (S2F) model.

This is a model devised for assets that are naturally scarce to obtain such as searching and mining gold hence driving up value over time as the supply of the asset diminishes.

“Stock-to-flow ratios are used to evaluate the current stock of a commodity (total amount currently available) against the flow of new production (amount mined that specific year).” – Into Bitcoin explanation.

As we head towards Bitcoin’s halving in May, whereby the supply rate of BTC will be cut into two from 12.5 BTC block reward to 6.25 BTC, the S2F model shows BTC is greatly undervalued. Despite the latest drop from $10,000 level to a current price of $6,400, the model shows BTC’s market cap can surpass the trillion-dollar mark once the halving occurs.

How much would a stock-to-flow 100 asset be worth? #bitcoin pic.twitter.com/1pvPpvcsnV

— PlanB (@100trillionUSD) March 30, 2020

“Bitcoin is greatly undervalued”

In a tweet showing the S2F model, crypto analyst Plan B, compared various “safe haven” assets including gold, silver, diamonds, palladium and platinum. Gold, which has long been seen as the go-to safe-haven asset, leads the field with a stock-to-flow ratio of 58 holding a $10 trillion market cap. Bitcoin (BTC), the first digitally scarce asset, is just below Silver (33) in the S2F model with a ratio of 27.

In the chart above, you can clearly see the value of BTC has been following the stock-to-flow model line and given we know the supply rate (halving schedules) of the top crypto over time, we can estimate the future price of BTC, at least in theory.

The trillion-dollar proposition

Currently at 27, the S2F ratio for BTC is expected to grow to 57 after the upcoming May halving, very close to gold’s if the supply rate of the latter remains constant. However, the market cap of gold which is currently at $10 trillion dollars is about 100X that of BTC which signals that BTC is greatly undervalued.

There seems to be a relation between SF (scarcity) and value: the higher SF, the higher market value. Gold SF is 58 and market value $10T. Bitcoin SF is 27 and market value $100B. After 2020 halving BTC SF will be 54, very close to gold. After 2024 halving BTC SF will be >100.

— PlanB (@100trillionUSD) March 30, 2020

Despite the extreme volatility experienced in March following fears of Corona Virus, whereby Bitcoin dropped from $10,300 to less than $3,800 in a day, the price remains firmly fixed within the deviation range the model suggests.

If BTC follows the model, the price may boost past $10,000 a month after the halving, with a probable move past $20,000 – BTC’s all-time price – in October. A trillion-dollar market cap is on the horizon for BTC in the coming years according to the model’s predictions as BTC will have a ratio of >100 once the 2024 halving is complete.

Basically #bitcoin is totally undervalued and that means one of two things. 1. People don’t know or understand what BTC is or 2. Certain people don’t want you to know or understand what BTC is. I’ll go with 1 for now.

— Jjdub (@jjwdub) March 30, 2020