The oldest US bank, BNY Mellon, presented a report that analyzes the price assessment of bitcoin. For the lending institution, the issue became particularly interesting after it supported a startup developing a custodial service for cryptocurrencies.
The institution’s four analysts compared the properties of the oldest cryptocurrency with those of gold and concluded that both have the advantageous property of limited supply for investors, and that the volume of gold production and bitcoin mining is driven largely by the efforts of various private organizations. In addition, they concluded that bitcoin could potentially repeat the fate of gold, which has long played a significant role in the global financial system, serving a variety of functions, not just as a means of accumulation as it mostly does now.
Talking about the price of bitcoin, analysts at BNY Mellon used a methodology to study this issue, which was applied by the author of the S2F model, known as Plan B. In essence, it is a comparison of the supply and demand for this asset over several years and deriving its projected price on the basis of past time periods. BNY Mellon noted that this methodology is considered “one of the most interesting valuation approaches and is worthy of study.
They also noted that it would take about 50 years to fully produce the amount of gold that is now on the market. Bitcoin, on the other hand, has a similar parameter of 20 years. Given the fact that this parameter increases with each halving of this cryptocurrency, in terms of this coefficient, which BNY Mellon called the S2F coefficient, the cryptocurrency is number one in its property approaching gold.
The oldest US bank BNY Mellon analysts also mentioned that the S2F model has received an expanded version in the form of S2FX, which takes into account the dynamics of supply and demand and other popular market assets. Recall that in accordance with the S2FX model until the next bitcoin halving, which will take place in 2024, the price of the oldest cryptocurrency can rise to the mark of $288,000.