As the short-term volatility in Bitcoin seems to be fading away, the stock-to-flow model suggests that Bitcoin might become more potent than gold as a safe-haven asset.
The charts for the google trend suggests that the interest in the search term ‘buy bitcoin’ followed the interest in ‘Bitcoin Coronavirus.’ It seems to have faded as the interest in the term subsided.
The pandemic spread of the deadly virus is still on-going as the number of daily cases is still increasing around 80,000 globally. The total number of individuals affected has now crossed 2.24 million.
Currently, ‘Bitcoin Halving’ is the bullish factor driving Bitcoin. It crossed the previous ATH in the google search trend for the term.
The projection of the current week seems to suggest that the interest is likely to witness a correction. However, with more than 24 days left to halving, the interest which topped during the halving week in July 2016 is expected to rise again.
Bitcoin Vs. Gold – Stock to Flow Model
The S2F model for gold suggests that inflation in gold is around 2%. Post halving, the inflation in Bitcoin will decrease to nearly 1.66%.
PlanB (alias), a crypto analyst notes,
2020 halving will be like 2012 & 2016. As per S2F (Stock to Flow) model, I expect 10x price (order of magnitude, not precise) 1-2 yrs after the halving. Halving will be make-or-break for S2F model.
Moreover, the model when used with gold suggests that post halving it will have a higher S2F ratio than gold itself. Currently, Gold has the highest S2F ratio among commodities.
The current macroeconomic environment points towards a recession on the back of a deflationary crisis. The price of assets is expected to become cheaper as the production and consumption are expected to slump.
During the last deflationary crisis from June 2007 to 2009, the price of gold increased by 50% to about $950, followed by a run to ATH at $1912 in the next two years. If Bitcoin continues to gain acceptance as safe-haven or digital gold, a bull market can be expected in BTC as well. Brain Kelly, a Bitcoin investor and host for CNBC fast money noted,
Higher stock-to-flow implies increasing scarcity. 21 million BTC is the hard-capped supply and is getting scarcer. While the FED is “Quantitative Easing” #Bitcoin continues its “Quantitative Hardening”
Do you think Bitcoin will gain global acceptance as money or safe-haven? Please share your views with us.