Will the Bitcoin stock-to-flow model stand its first test?

stock to flow model

Bitcoin priced in Gold (BTCXAU) is currently at its lowest point in four years according to Plan B’s stock-to-flow model creator. This is not entirely good news for Gold if BTC doesn’t see a post-halving price rally.

The statement reads:

bitcoin priced in gold (BTCXAU) …at its lowest level in 4 years. Stock-to-flow suggests BTC or gold.

According to a tweet by Plan B on the 18th of April 2020. 

Gold flourishing as bitcoin continues to crash

Following the massive decline in the global economy caused by the recent COVID-19 pandemic, gold has recovered well. The safe-haven asset made a huge recovery on the 14th of April as it recorded its highest rate for the first time in seven years, climbing to about $1700. 

This significant rise took bitcoin by storm as popular gold critic Peter Schiff was forced to predict good fortunes for gold and more woes for bitcoin. According to him, the shiny metal will continue to “moon” but Bitcoin will experience a huge decline.

The first test for stock-to-flow model

Bitcoin is about to be more limited than gold according to the stock-to-flow model because its rate of inflation annually is less than that of gold.

This being said, if this model is true, plan B is predicting that the price of bitcoin will increase ten times its present value by 2021.

However, the stock-to-flow model still faces a lot of criticism because it only takes supply into consideration, leaving out demand. It remains to be seen if the stock-to-flow model bitcoin prediction will eventually turn out to be the case come 2021.

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Ifeanyi Egede

Ifeanyi Egede

Ifeanyi Egede is an experienced and versatile freelance writer and researcher on the blockchain space and related matters with published works online and in the print media. He has close to a decade of writing experience. When he is not writing, he spends time with his lovely wife and kids.

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