The stock-to-flow model makes the comparison of the circulating commodity divided by the amount produced on a yearly basis.
The popular model has often been used to traditionally analyze the intrinsic value of precious metals such as gold, silver, and others alike.
The Weiss Crypto analysts noted:
“Although based on a different methodology than the one used by the Weiss Cryptocurrency cycles model, it is widely respected in the crypto world. And it now points to a ferocious rally over the next 12 months or so.”
Comparing Stock-To-Flow (S2F) Model of Gold and Bitcoin (BTC)
According to Bruce Ng and Juan M. Villaverde, the Weiss Crypto Ratings analysts, Gold presently has an S2F of 62, which implies that the precious metal needs 62 years of current production to equal the global above-ground holdings, while it will take silver 22 years under the same condition.
The two analysts jointly stated that macro-economic factors are in favor of Bitcoin (BTC). This is related to the United States Federal Reserve’s money-printing spree in the past weeks:
“By any measure, this is corruption of money on an industrial scale. Historically, investors pour into gold as a safe haven when they lose confidence in paper money. This time, they’re going to pour into Bitcoin as well. And indeed, both are already on the rise. However, Bitcoin’s been going up faster, outperforming gold since the pandemic panic hit. And this is just the beginning.”
Increase in Institutional Inflow into Bitcoin (BTC)
Bruce Ng and Juan M. Villaverde also cited the increase in the institutional investment in Bitcoin (BTC). For instance, Grayscale Bitcoin Trust (GBTC) has been in BTC purchase spree since the beginning of the year, while the hedge fund giant, Paul Tudor Jones, made it known that bought BTC worth $210 million.
The Weiss analysts wrote:
“Long-term investors should look for weakness in this crypto asset for entry points and hold on tight. The long-term outlook could scarcely look more exciting.”