- Erik Voorhees predicted that in the next Bitcoin Halving in 2024, BTC’s stock to flow ratio will be relatively higher than that of gold.
- Before 2020 Halving the stock to flow ratio was 26.93, and after Halving, it rose to 55.92.
- After the next Halving, the stock to flow ratio expected to increase to 121.4, surpassing gold at 62.
In a recent tweet by Erik Voorhees, he predicted that in the next Bitcoin Halving in 2024, BTC’s stock to flow ratio will be relatively higher than that of gold. In his tweet, he has further questioned whether there has been another commodity that has achieved such a feat. Voorhees is a renowned Bitcoin advocate. He is also the Chief Executive Officer of Shapeshift. Shapeshift offers trading options in dozens of cryptocurrencies like Bitcoin, Ethereum, Monero, and so on.
By 2024, the time of the next halving, Bitcoin's stock-to-flow ratio will be higher than gold. Has there ever been another commodity that has achieved this?
— Erik Voorhees (@ErikVoorhees) July 16, 2020
The Ratio Depends Upon Annual Supply And Inventory Years
The term mentioned above, stock to flow ratio is a measure or rather a ratio between the years of inventory relative to its annual supply. While consumable goods whose economic utility affected when consumed or used up. Investment assets’ utility depends mainly upon their possession and later reselling. Hence, industrial or consumable commodities generally have low stock to flow ratio because of their number of inventory years.
On the other, investment assets like gold, which are generally held and accumulated by the investors, have relatively higher stock to flow ratio. Similarly, Bitcoin also has a higher stock to flow ratio because of its Halving. Bitcoin Halving is an event where its supply is reduced to half once the total number of blocks reaches the 210,000 mark. However, in turn, reduces the mining rewards to half of the previous one. On May 11, Bitcoin experienced its third Halving, where the mining reward cut down from 12.5 BTC to 6.25 BTC.
Bitcoin Halving Will Increase the Stock to flow Ratio
Bitcoin often referred to as ‘Digital Gold.’ To some extent, this is because the stock to flow ratio of Bitcoin is more or less comparable with that of gold. Voorhees said the ratio of Bitcoin would surpass that of gold in the next Halving holds some truth. This is because the supply or the block rewards will halve in the next Halving, meaning annual supply will decrease, hence the stock to flow ratio will increase. Before 2020 Halving the stock to flow ratio was 26.93, and after Halving, it rose to 55.92. And after the next Halving, the stock to flow ratio expected to increase to 121.4, surpassing gold at 62.
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