BNY Mellon Report Takes On Bitcoin Valuation

Last month BNY Mellon revealed it would soon custody bitcoin and other digital assets for asset managers the same way it handles their other more traditional holdings. This month it invested in Fireblocks, the Israeli digital assets infrastructure startup whose technology is underpinning BNY Mellon’s custody service.

share

key takeaways

  • New report compares bitcoin to gold and highlights the stock-to-flow ratio in an attempt to evaluate the digital asset’s price and role in the real economy
  • BNY Mellon plans to be a key player in the new financial world

The Bank of New York Mellon issued a report over the weekend comparing bitcoin to gold and highlighting the stock-to-flow ratio in an attempt to evaluate the digital asset’s price and role in the real economy.

“In today’s environment, where the intrinsic value of fiat currencies is increasingly being questioned, it is important to consider the value of alternative currencies such as bitcoin,” the report said. 

“Ultimately, bitcoin valuation will likely be a combination of several models and be constantly evolving, especially as it gains mainstream acceptance,” it said later in the report.

BNY Mellon, a $41 trillion-asset bank and the oldest bank in the US, has said digital assets are “becoming part of the mainstream” and that it plans to be a key player in the new financial world. Last month it revealed it would soon custody bitcoin and other digital assets for asset managers the same way it handles their other more traditional holdings. This month it invested in Fireblocks, the Israeli digital assets infrastructure startup whose technology is underpinning BNY Mellon’s custody service.

The Stock-to-Flow Ratio

The stock-to-flow ratio is “one of the more interesting” valuation concepts, according to the report. It measures the abundance of a particular resource and assumes that scarcity drives value. 

Critics of the stock-to-flow ratio maintain that supply doesn’t define price, gold’s movement is explained by the purchasing power of the dollar and gold trades are based on inflation or currency debasement expectations. 

But many aspects of valuation are a relative exercise, and the stock-to-flow model pegs relative scarcity to an asset widely accepted as an alternative currency and store of value. 

“Recall the problem of valuing bitcoin from a traditional currency basis due to a lack of relativity,” it said. “In many forms, the stock-to-flow model is elegant (and potentially flawed) in its simplicity. It provides that relativity to link bitcoin with a much more established gold market.”

The gold alternative

Commodities have the largest stock-to-flow ratios and historically, gold has had the highest. Gold and bitcoin are increasingly being perceived as alternatives to each other, depending on investors’ comfort level.

Gold’s stock-to-flow ratio is currently over 50, bitcoin’s is in the 20s, according to the report — meaning it will take 20-something years to double the total stock of bitcoin at the current rate of production. 

PlanB's developing stock-to-flow cross asset model (S2FX)
Source: PlanB

According to the Dutch institutional investor PlanB’s developing stock-to-flow cross asset model (S2FX), bitcoin is currently in the red dot, financial asset cluster of the chart above. 

In the stock-to-flow cross asset model, bitcoin evolved into a new type of asset with different properties in each phase. PlanB outlines four: the proof of concept phase (stock-to-flow 1.3 and market value $1 million); bitcoin for payments (stock-to-flow 3.3 and market value $58 million); e-gold (stock-to-flow 10.2, market value $5.6 billion); and bitcoin as a financial asset (stock-to-flow 25.1 and market value $114 billion).

“As bitcoin gains more mainstream momentum and is viewed more like gold, the scarcity value (as measured by stock-to-flow) and subsequent halving will ultimately drive prices to the gold dot cluster and implied total market value,” the report’s authors wrote.

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Brooklyn, NY

SUN - MON, JUN. 22 - 23, 2025

Blockworks and Cracked Labs are teaming up for the third installment of the Permissionless Hackathon, happening June 22–23, 2025 in Brooklyn, NY. This is a 36-hour IRL builder sprint where developers, designers, and creatives ship real projects solving real problems across […]

recent research

Research Report Templates.png

Research

Maple Finance has successfully navigated significant market challenges through its strategic pivot to secured lending (Maple v2) and the launch of its Syrup product. Syrup has become a primary growth driver, delivering sustainable, outperforming stablecoin yields and rapidly increasing TVL. The upcoming custody-first Bitcoin staking product (istBTC) presents another significant avenue for expansion. Crucially, Maple has achieved operational profitability, a key inflection point that, combined with a fully vested token and active buyback mechanism, strengthens its investment case. While valuation metrics suggest potential undervaluation relative to peers and growth, the primary forward-looking risk identified is the long-term sustainability of its current high-take-rate collateral staking revenue model.

article-image

Funds disagree about which metrics matter, but agree fundamentals are key

article-image

PGP creator Phil Zimmermann’s connection with Bitcoin is complicated

article-image

Blockworks spoke with a dozen current and former employees about the problems that have plagued Bitget’s blockchain, Morph

article-image

Perpl, a perps DEX, plans to launch testnet by the end of this year

article-image

A recent Citi report predicted that stablecoin AUM could hit $3.7 trillion by 2030, largely because of institutional adoption

article-image

The startup hopes to reduce crypto’s reliance on AWS and Google Cloud