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The trillion-dollar asset manager Fidelity is scrutinizing a popular and controversial Bitcoin price model.

A recent report from Fidelity Digital Assets analyzes the stock-to-flow ratio, which divides the amount of a commodity in circulation by the amount mined per year.

Using the correlation between an asset’s price and its S2F ratio, the pseudonymous crypto analyst PlanB has predicted that Bitcoin’s value will soar to $1 million by 2029.

Although there is a fierce debate on whether the stock-to-flow ratio is an accurate way to forecast Bitcoin’s trajectory, Fidelity says the model is a credible tool for analyzing scarce assets. The firm says historically, the metric is a sound way to judge whether a given commodity will become a successful store of value.

“Commodities with a stock that is difficult to double due to a low rate of production relative to existing supply have historically served as superior stores of value. Such commodities are largely used for investment purposes, and occasionally industrial uses. On the other hand, consumable commodities that are susceptible to large increases in supply, are less effective in storing value.

In the Bitcoin Standard, Saifedean Ammous adapted stock-to-flow to compare bitcoin to commodities used for investment and consumption and the use of the metric has since expanded and even given rise to models based on the ratio. Gold, the most resilient store of value through the ages, has the highest stock-to-flow ratio, followed by Bitcoin (today) and silver. Following the recent halving (May 2020), the gap between the gold and Bitcoin ratio compressed. Bitcoin’s stock-to-flow will eclipse that of gold following the next halving (2024).”

Source: Fidelity

Grayscale echoes Fidelity’s assessment that commodities with high S2F ratios are typically sought after by investors. The investment giant looks at Bitcoin to illustrate the positive correlation between an asset’s price and its S2F ratio.

“Commodities with high stock-to-flow ratios such as Bitcoin, gold, and silver have historically been utilized as stores of value. Figure 10 shows a popular model that uses Bitcoin’s historical relationship between price and stock-to-flow to estimate a future price.”

Source: Fidelity

However, Grayscale cautions that the S2F price model does not guarantee an increase in the asset’s value.

“While it’s true that price has followed this stock-to-flow model with high correlation, the relationship may be spurious and does not take into account the requisite demand for price appreciation.”

Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.

Author: Daily Hodl Staff

Source: Daily Hodl: Asset Giant Fidelity Analyzes Model That Forecasts Bitcoin Rise to $1,000,000

One of the richest Bitcoin holders on record just completed a huge crypto transfer.

Traders are searching for clues as to why the whale completely drained a Bitcoin wallet, sending the trove of BTC to an unknown address.

The crypto tracker Whale Alert spotted the single transaction of 14,922 BTC worth $143.96 million. The multi-million dollar transfer cost 0.00003138 BTC – which is about $0.30.

According to BitInfoCharts, the wallet of origin steadily accumulated the BTC in a span of one month.

On April 5th, the wallet was the 58th richest Bitcoin address holding over 12,380 BTC worth $85.08 million.

By May 13th, the wallet had jumped 10 spots to claim the 48th richest Bitcoin address, storing more than 15,470 BTC which was worth $138.15 million at the time.

Source: BitInfoCharts

New data shows Bitcoin whales are steadily accumulating BTC.

According to Glassnode, the number of Bitcoin addresses holding at least 1,000 BTC briefly dropped after the big crash in mid-March, but quickly returned to elevated levels as the market recovered.

Source: Glassnode/Twitter

Author: Daily Hodl Staff

Source: Daily Hodl: Massive Crypto Whale Drains Bitcoin Wallet, Moves $143,000,000 in BTC in Single Transaction

Portfolio manager and crypto analyst Mati Greenspan says billions of dollars are essentially sitting on the sidelines, ready to move into Bitcoin, Ethereum, XRP and the altcoin market at large.

Greenspan is using data from the crypto research firm Messari, which shows that the total value of all stablecoins is just shy of $6 billion. Stablecoins are digital currencies that are pegged to traditional assets like fiat. They’re designed to maintain a steady value and offer crypto traders an easy way to sidestep the extreme volatility of the crypto markets.

Greenspan’s theory implies that the billions of dollars in the stablecoin market represent traders who have decided to exit their positions in BTC, ETH, XRP and other crypto assets and are waiting for the optimal time to re-enter the market.

Binance Research released a report in November on the habits of 69 clients with crypto allocations ranging from $100,000 to $25 million.

The report found that 96% of those investors are using the stablecoin market, with Tether (USDT) ranking as the favorite.

“USDT is the dominant stablecoin with 40.25% usage, holding the top ranking for both Chinese and English survey respondents. USDC, TUSD, PAX are following close behind USDT, and several English survey respondents wrote in BUSD under ‘Others’, reflecting an initial interest by our institutional & VIP clients…

Putting the broader results in line with respective market capitalizations, the overall use for each stablecoin is roughly in line with the rank of its respective market capitalization.”

Author: Daily Hodl Staff

Source: Daily Hodl: Nearly $6,000,000,000 Ready to Move Into Bitcoin, Ethereum, XRP and Altcoin Markets: Crypto Analyst Mati Greenspan

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