The oldest bank in the United States in operation, BNY Mellon, reaffirmed its bet on bitcoin by publishing a new report. As we show in the text “Bitcoin will save banks – Understand how”, banks are already positioning themselves in the crypto market. The investment is low for something that can save them, risk-to-opportunity ratio is large. For this reason, BNY invested a few months ago in Fireblocks, a custodian for crypto. "BNY Mellon plans to use Fireblocks technology to support a new business that the bank revealed last month, in which it plans to serve as a custodian for digital assets on behalf of institutional investors." – Wall Street Journal.
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The participation of the oldest U.S. bankers in bitcoin seems to have no sign of weakening. That week BNY published a report praising the stock-to-flow (S2F) model.What is the S2F model?Stock-to-flow or S2F is a model initially used in the commodities market to find out how long the current mining flow of a metal would be needed to “cover” its current total. For example, let's say that the gold stock is 190 thousand tons and the supply is 2900 tons, therefore, we have a 66-year ratio for current production to reach the value of reserves. Comparing the metals markets with that of bitcoin, the cryptocurrency's S2F predicts btc at $ 100,000 (approximately $ 500m) l by 2024:S2F and bitcoin price “… the stock-flow (S2F) ratio is one of the most interesting valuation concepts and is worth understanding despite its flaws. “- said the bank. But the criticisms were also acknowledged: What are the advantages of this proportion? He does not recreate the wheel, nor does he argue for an esoteric case of intrinsic value for an intangible digital asset. “This proportion points to a relative measure of“ scarcity ”for something that is already commonly well received as an alternative currency and store of value. Critics of S2F will say that supply does not define price, noting that the price of gold has fluctuated massively in its history, while its S2F has been close to 60. They argue that most of the gold movement can be explained by the dollar's purchasing power and the purchase / sale of gold is based on expectations of inflation or exchange rate degradation. For all of these points, we agree. Remember the problem of valuing Bitcoin from a traditional monetary base due to the lack of relativity. In many ways, the S2F model is elegant (and potentially flawed) in its simplicity. It provides this relativity to link Bitcoin with the more established gold market / structure. ”The report also cites the S2FX model, an updated version of S2F in which btc is phased. “The implication of this model is that as Bitcoin gains more mainstream momentum and is seen more as gold, the scarcity value (as measured by S2F) and subsequent halving will ultimately drive prices to the cluster of points of gold and the total implied market value. “