I know we are going through a hard time with the pandemic, and a lot of us are struggling financially. I read a great article from dailyhodl, and it inspired me to look to the future and hopefully bring some much-needed hope for those of us hodling Cardano in the crypto space.
The current stock-to-flow ratio of gold is 62, meaning it would take 62 years for gold to double its supply. For silver, the stock-to-flow is 22, and for Bitcoin, it is 27 currently.1 The higher the stock-to-flow ratio, the more scarce the commodity is. This means Bitcoin's stock-to-flow is more similar to silver than gold currently.
With the 2020 halving event the stock-to-flow ratio for Bitcoin will increase to 55.8
Calculation
Circulating supply / yearly production = stock-to-flow ratio
18,342,500 btc / 328,500 btc = 55.8
A 55.8 stock-to-flow ratio after the 2020 halving will bring bitcoin closer to gold's 62. However, the 2024 halving will be the game-changer because the yearly production of Bitcoin will shrink from 328,500 btc annually to 164,250 btc and increase the stock-to-flow ratio to around 119.7.
19,664,000 btc (projected btc circulating supply in 2024)/ 164,250 btc = 119.7
It will take 119.7 years to double the supply of bitcoin compared to gold's 62 years. Miners in the next 4 years will go from making 12.5 btc per block in Q1 2020 to 3.125 btc by 2024. This supply shock will possibly send the market cap of bitcoin to well over a trillion dollars and bolster the market caps of the entire cryptocurrency market including Cardano. All this without taking into account the increase in infrastructure in the crypto space, the increase in interest from traditional finance, the growth of defi, increased adoption, improved scalability within the crypto space, increase in developers, and improved technology. My advice is to hodl strong.
Reference
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