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Bitcoin has just increased from the baseline of the Stock-to-flow model

Since the beginning of 2020, the discussion about the upcoming Bitcoin halving has left the leading cryptocurrency and the rest of the skyrocket cryptocurrency market out of control.

Pullback has only happened in the past week due to panic caused by Corona virus in the market. But despite the sell-off, Bitcoin is still rising, exiting the baseline of the stock-to-flow model showing that asset values ​​will increase exponentially after halving in May.

Halving Bitcoin is very close to us

The cryptocurrency market has been anxious to wait for halving since the first downtrend appeared on the market, as the expected reduction in Bitcoin supply due to halving will cause an imbalance between supply and demand, causing the price to rise.

Because most of the Bitcoin value is based on its digital scarcity, this event is especially notable.

In addition, a stock-to-flow model has been developed to track Bitcoin price progress based on that scarcity.

This model is frequently cited throughout the cryptocurrency industry and even in mainstream finance. Accordingly, indicated that Bitcoin reached a price of $ 55,000 after halving.

Bitcoin increased from the baseline of the Stock-to-flow model

This model includes a 10-day and 1-year moving average (MA) along with another MA that describes the difference in actual price compared to what stock-to-flow predicts.

According to that prediction, Bitcoin has grown perfectly from the 365-day baseline.

"If in doubt, minimize the chart.

A few weeks before each halving occurs, Bitcoin hits the price of the S2F model. This time is no different.

S2F 10 days: $ 9,303

S2F 365 days: $ 8,317

Average: $ 8,810

Current price: $ 8,811"

In the previous two cycles of up and down, Bitcoin did the same thing right before halving and before a monster rally.

Shortly before the event, BTC was sold off back to the baseline and once again increased from there.

Thus, the last increase came on the basis of a sharp price drop before Bitcoin took off into a comprehensive growth market.

However, this time may be different. Bitcoin now faces stiff competition from the rest of the altcoin market and the larger financial market is in turmoil after fears of a possible pandemic, war and global economic crisis. bridge.

Although assets designed to replace fiat currencies are unlikely to support the recession, high-risk speculative assets may be too young at this stage to serve that ultimate goal.

The collapse of the monetary system can create too much fear for investors when considering it, even with a catalyst like halving imminent.

Analysts have predicted Bitcoin boom to $ 1,000,000 warning halving BTC 'brain damage' is coming

A famous analyst using stock-to-flow ratios for Bitcoin insists the leading cryptocurrency is facing some headwinds when the halving in 2020 is near.

Halving happens about every 4 years and reduces the BTC block reward to only half that of the present.

PlanB analyst said Bitcoin supply schedule is closely related to price. He was the first to apply a stock-to-flow model to BTC to track the supply and circulation of an asset compared to the new supply. Often used to track prices for gold and precious metals, PlanB says the ratio is closely correlated with Bitcoin's past price movements and shows that BTC reached a high of $ 1,000,000 in one round. decade.

But with the impending halving, PlanB emphasizes that Bitcoin has a lot of issues to fix, including regulatory uncertainty in the U.S., hacking and fears about BTC sales going into hackers and the possibility of collapse. shed haunts from the infamous MtGox case.

Halving Bitcoin n2020 will not be an easy trip:

– US / Mnuchin: anti-law BTC draconian

– Craig Wright: Legal FUD and patent

– Hacks: like halving 2016 (DAO, Bitfinex)

– MtGox and PlusToken

– Death spiral miner and FUD contract future

– Fork"

Stock-to-flow skeptics say the introduction of Bitcoin derivatives tools could prevent Bitcoin from rising during this period. They also point out that Bitcoin has only experienced two halving in the past, so there is too little data to confirm their impact on Bitcoin price.

Ethereum creator Vitalik Buterin is also not a fan of stock-to-flow. Brother positive It's part of the “bullshit” cryptocurrency culture, such as attaching Bitcoin prices to global events like the Corona virus.

Despite his fears, uncertainties and doubts, PlanB said his model shows the Bitcoin price will come where it needs to go. He likens Bitcoin's stock-to-flow ratio to that of a drunkard accompanying his dog, meaning that although the BTC price may wobble higher and lower than the predicted price, it cannot stray too far. and always back in the right direction.

“The drunk guy and the dog seem to be very close together before the halving event of Bitcoin 5/2020.”

It won't be too long until we see how the stock-to-flow model drives prices up. PlanB said he expects Bitcoin to reach $ 100,000 by the end of 2021.

BTC price today | Source: Coinmarketcap

Disclaimer: This is not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.

Thuy Trang

Bitcoin Magazine

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