We've just had a another retrace recently, BTC is at the $35.9k- $36k region and no one knows where it's going to go from here. We know what support level has to hold and we also know if the current support level doesn't hold, it could go back to 20K region.
Now reading the title you may think I'm crazy. Trust me, I'm not. I'm dealing with some eye problems which may keep me away from my laptop for a while, but I can still think clearly.
I've been looking to the Stock-to-Flow Deflection model (S2F),
according to which, bitcoin is the most undervalued with respect to the last 10 years of its history.
This model treats Bitcoin as being comparable to commodities such as gold, silver or platinum. These are known as 'store of value' commodities because they retain value over long time frames due to their relative scarcity. It is difficult to significantly increase their supply i.e. the process of searching for gold and then mining it is expensive and takes time. Bitcoin is similar because it is also scarce. In fact, it is the first-ever scarce digital object to exist. There are a limited number of coins in existence and it will take a lot of electricity and computing effort to mine the 3 million outstanding coins still to be mined, therefore the supply rate is consistently low.
Stock-to-flow ratios are used to evaluate the current stock of a commodity (total amount currently available) against the flow of new production (amount mined that specific year).
As you can see on the chart, the last time BTC was this undervalued was in 2017, when bitcoin was around $2,000, right in the middle of the bull market, after which the price continued its exponential growth. History says after each low, price rebounded hard.
Now if this model is right, that means we're heading to the ATH area, or we can even break it, establishing anew ATH. This is what we all want but things are never so simple and definitely don't happen as we want to.
According to the S2F model, BTC should already be around $100,000. Plan B, the model creator says the model has never been wrong.
At the time, Plan B said that he predicts the price of BTC will “tap $100K-288K before [December] 2021. In fact, I have new data that confirms the supply shortage is real,” he added. On March 1, 2021, Plan B revealed that the S2F model was still working and the price of BTC was actually 26% above the model’s predicted trajectory. source
Gareth Soloway recently said in an interview, that BTC is sitting on a trend line after retracing and it's going to go to $20k eventually. The $20k is a possibility and I'm getting ready if it happens. If it does, then better now than after we reach the $50k level, however I have a plan for that scenario as well. Maybe that plan is even better.
I don't know what's going to happen first, $50k region or $20K region, but I'd like to prepare myself for both. Either way there's an opportunity to profit from, if you are prepared.
This post is a little bit shorter than my usual posts and I'd like to ask commenters for a little patience. I'm going to reply and comment shortly, but right now my eyes are No. 1 priority and in order to get better, I need to stay away from the big screen. But I'll be back :) Till then, stay safe!
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