Analysis of Bitcoin’s recent price surge, which saw the cryptocurrency achieve an all-time high of $123,091, reveals it could be significantly undervalued relative to gold, according to scarcity metrics. Market observers point to the Stock-to-Flow (S2F) model indicating Bitcoin’s price is approximately ten times lower than projections based on gold’s valuation metrics due to Bitcoin’s inherent scarcity.
The S2F ratio, which measures scarcity by comparing existing stockpiles relative to new annual issuance, is calculated at roughly 120 for Bitcoin. This figure is double gold’s S2F ratio of approximately 60, underscoring Bitcoin’s increasing rarity enforced by its fixed supply cap of 21 million coins.
Current market capitalizations highlight a stark disparity; gold commands a valuation of roughly $20 trillion, dwarfing Bitcoin’s approximate $2 trillion valuation. This market cap mismatch supports the argument stemming from the S2F comparison that Bitcoin may presently be undervalued by a factor of ten relative to the precious metal.
Analysts, including Matt Hougan, Chief Investment Officer at Bitwise, forecast significant potential growth for Bitcoin. Predictions suggest the cryptocurrency could reach $200,000 in value, driven primarily by accelerating institutional investor demand seeking portfolio diversification and exposure to its unique monetary properties.
Technical market indicators bolster the positive outlook. Robust trading volumes, consistently exceeding $65 billion, demonstrate strong market participation and underline resilience, further supporting the prevailing sentiment favoring Bitcoin’s long-term value proposition.