Plan B Finds Fidelity’s Views on BTC’s Stock to Flow Model Interesting

  • Launched in 2018, The Fidelity Digital Assets company initially started with BTC and ETH funds just for the sake of exploring.
  • Plan B known for his knowledge over BTC’s S2F model.
  • The thesis points out that BTC will overtake that of Gold’s by next halving.

The Fidelity Digital Assets are a part of the multinational investment company which provides support to the institutional investors. Launched in 2018, the company initially started with BTC and ETH funds just for the sake of exploring. The CEO assured that they would increase the number of cryptocurrencies soon. The subsidiary has released their Bitcoin investment thesis back in the month of July. As per them, the world’s largest cryptocurrency, Bitcoin is viewed as an aspirational store of value. According to a representative from BKMC, Brian Kelly, BTC has been the most significant innovation in the field of finance, the last once being the double entry accounting by the Medicis. 

Plan B Highlights the Portion Where Fidelity States That BTC’s S2F Will Eclipse Gold’s by Next Halving

One of the renowned Bitcoin commenters, Plan B known for his knowledge over BTC’s S2F model has tweeted regarding this. He says that it is interesting to see Fidelity’s point of view on Bitcoin and stock to flow. He specifically highlighted a portion from the thesis which read, commodities which have higher S2F value  tend to become the superior stores of value. Assuming BTC’s current stock to flow, it will equal that of Gold’s S2F by the next halving that is scheduled to be in 2024. 

Bitcoin has a High S2F, Hence Suitable as a Store of Value

Stock to flow refers to the ratio of stock to the flow of the company. Stock is the total size of the company’s reserve and flow is the yearly production. Currently, Gold has the highest SF which is 62 and that of BTC after the third halving is 50. The thesis elaborated that commodities with higher S2F often serve as great investments for both retail and institutional investors. However, consumable commodities which have higher chances of supply surge tend to be less effective as a storage of value. 

Thesis Highlights Plan B’s Stock to Flow Model

As mentioned, Gold has the highest value of S2F, followed by Bitcoin and then silver. However, during the most recent halving the difference between S2F of Gold’s and Bitcoin’s compressed and it is anticipated that BTC will overtake that of Gold’s by next halving. The thesis points out that an anonymous personality (Plan B) had worked out the valuation model for Bitcoin’s stock to flow model. A significant relationship between Bitcoin’s market value and its degrading supply has been determined. However, the model does not capture demand, an important aspect for market value evaluation.

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