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August 9, 2022
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BNY Mellon compared BTC to gold –

The oldest bank in the US, BNY Mellon, has just compared Bitcoin to gold. By the way, he cited a controversial valuation model, S2F, according to which 1 BTC should cost as much as USD 288,000 in 2021.

BNY Mellon: Bitcoin is digital gold

In a new report, the bank states that the dynamics of supply and demand for the flagship cryptocurrency mirrors the dynamics of the yellow metal.

So far, Bitcoin seems to play nicely with gold in both supply and demand. With that in mind, we’ll use gold as a starting point to discuss potential Bitcoin pricing methods

– stated in a new bank document.

On this occasion, BNY Mellon cited the S2F model, which is traditionally used to price precious metals (e.g. gold), but some time ago it was applied to Bitcoin by the well-known PlanB analyst.

To this it was added that as Bitcoin has a lower S2F factor, this model suggests that the cryptocurrency may even eventually outstrip gold’s market capitalization:

Raw materials such as gold have the highest S2F factors (over 50), meaning it would take over 50 years to obtain the current gold stock.

Bitcoin has a current S2F of 20. This suggests, according to the bank, that BTC ultimately may at least “Achieve the market capitalization of gold.”

The model may be faulty

However, BNY Mellon analysts point out that the model they took into account could be flawed.

In turn, the day after the publication of the BNY report, Mellon PlanB assured that he was confident in the S2F model:

My confidence in the 2019 S2F and S2FX from 2020 is high. It is based on the performance and achievements of S2F (X). (…) This model counts specific trades and recognizes bull / bear markets.

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