Last month, German state-owned bank Bayerische Landesbank (also known as BayernLB) published a report discussing Bitcoin’s equity-to-equity ratio, with the authors concluding that Bitcoin was actually “designed as a hypermarket hard currency.
Apparently, the authors of BayernLB relied on a stock-to-flow model previously proposed by Twitter user PlanB.
For those unfamiliar, the stock-to-flow ratio is the supply of a good or asset divided by the quantity produced each year. This measure indicates the abundance or scarcity of a commodity. In other words, the ratio represents the number of years required to take into account current productivity. Gold is considered the commodity with the highest inventory ratio. However, Bitcoin will be more scarce than gold, which could be a bullish indicator in the long run.
Still, the authors advise caution when making predictions based on models. Even the best statistical models can fail when predicting the future, the report notes. Beyond that, the next Bitcoin halving event, happening next year, challenges the model.
Golds recent gains have been helped by central banks aggressive easing programs, with prices hitting their highest level in about five years in early September. The precious metal, used as a safe-haven asset, has been bullish for months, also because of its high inventory-to-flow ratio.
Even though bitcoin has had its worst month since November 2018, the largest digital currency by market capitalization should be able to reach a high-float stock similar to golds currently. In reality, bitcoin will be even more scarce than the metal, the report said.
BayernLB sees a strong correlation between the price of Bitcoin and its circulation ratio. The author was inspired by Twitter user PlanB, who used the same model to estimate that Bitcoins market capitalization is heading towards $100 trillion by 2028.
Interestingly, although this figure is not realistic from the current point of view, because 100 trillion US dollars exceeds the sum of all fiat currencies, but there is indeed a certain correlation between the assets stock-to-flow ratio and the price. Has a certain reference.
The original text comes from bitcoinist, compiled by the Bluemountain Labs team, the English copyright belongs to the original author, please contact the compiler for Chinese reprint.
The original text comes from bitcoinist, compiled by the Bluemountain Labs team, the English copyright belongs to the original author, please contact the compiler for Chinese reprint.
