Fidelity claimed in its latest report that Bitcoin’s stock-to-flow ratio will surpass that of gold after the next BTC halving in 2024. Despite the nature of this news, Bitcoin’s demand has shown no signs of recovery.

  • According to a new report from Fidelity, Bitcoin’s stock-to-flow could surpass that of gold.

  • Even as Bitcoin’s popularity soars, its demand paints a contradictory picture.

You may have heard of the popular Bitcoin [BTC] stock-to-flow model. Well, thanks to a new report from Fidelity, it’s back in the headlines and perhaps worth giving it some attention.

One of the main conclusions of the Fidelity report is that Bitcoin’s stock-to-flow ratio could surpass that of gold. It does not provide an exact prediction, but it suggests this is a likely outcome after the next Bitcoin halving.

So what does it mean that Bitcoin has a higher stock-to-flow ratio than gold? Well, the stock-to-flow ratio assesses the ratio of existing supply to new production or new supply. In other words, it is used to emphasize scarcity.

Scarcity determines value

The report suggests that Bitcoin will become more scarce than gold after the 2024 Bitcoin halving. This could be a major turning point in terms of demand. The report further points out demand drivers that highlight Bitcoin's appeal. Some of these reasons are inflation, increased money supply, central bank and government intervention.

We have seen significant regulatory intervention this year, but there is an unexpected factor that has made the shortlist. Low interest rates could also be a factor, the report said. So far, higher interest rates have had a significant impact on the price of Bitcoin, and this effect will continue into the future.

PlanB’s infamous stock-to-flow model has fallen victim to scrutiny in the past for being less reliable than expected. As such, there may be some friction with this new S2F forecast. There are many factors to consider that could have an impact on Bitcoin, especially in the short term.

As of now, the regulatory environment remains murky, so the outcome may still be difficult to predict. However, it is clear that Bitcoin’s popularity has reached a level that governments can no longer ignore.

So will BTC recover?

Despite the nature of the above information, demand for the king of cryptocurrencies remains low. BTC’s open interest levels remain significantly lower than during the 2021 bull run. Despite this, demand in the derivatives market is still growing.

Bitcoin’s estimated leverage ratio has risen from its lowest point this year. While it’s not necessarily an accurate measure of demand, it highlights the return of confidence in BTC’s future.