Trend Line Touch Could Send Bitcoin On A Tear

Popular Bitcoin model Stock-to-Flow (S2F) shows BTC has touched a trend line that has historically sent the crypto flying.

Bitcoin Touches S2F Deflection Trend Line

As pointed out by a crypto analyst on Twitter, BTC seems to have just touched a lower S2F deflection trend line.

The S2F or Stock-to-flow Bitcoin model helps in predicting the price of BTC. The method has proved to be remarkably accurate so far, besides a few points of deviation.

S2F model is based on the ratio between the stock (supply) and the flow (annual production). The model can be applied to any asset, not just BTC. A higher value of the indicator means the commodity is more scarce.

Here is how the latest S2F chart for Bitcoin looks like:

The BTC S2F chart seems have a negative deflection at the moment | Source: buybitcoinworldwide.com

As the graph shows, despite some deflections during certain periods, the model still seems to be close. Currently, the chart shows a negative deflection.

Now, there is another, related indicator of relevance here. The Stock-to-Flow deflection. This metric highlights whether an asset is undervalued or otherwise in terms of its S2F value.

Related Reading | On-Chain Expert Predicts $162K Bitcoin Peak This Cycle

The BTC S2F deflection is calculated by taking the ratio between the current price and the S2F value. When the ratio is more than 1, it means BTC is overvalued, while if it’s less than 1, the crypto is said to be undervalued.

Below is a chart that shows the current trend in the BTC S2F deflection value:

The BTC S2F deflection ratio is much less than 1 right now | Source: glassnode

As the graph shows, there is a trend line that Bitcoin has touched in the past, soon after which the price has jumped up.

It seems like the crypto has once again made a touch on this line, and if past pattern follows, the price might move up.

BTC Price

At the time of writing, Bitcoin’s price is around $38k, up 2% in the last 7 days. Over the past month, the coin has accumulated 8% in gains.

Here is a chart showing the trend in the value of the cryptocurrency over the last 6 months:

BTC seems to be once again moving downwards | Source: BTCUSD on TradingView

After a relieving period of sharp uptrend where Bitcoin reached $42k, the coin is once again falling down. As the S2F deflection trend line shows, it’s possible the price might shoot back up. However, that’s only given the pattern indeed holds.

Related Reading | “The Death Of China’s Bitcoin Mining Industry,” 7 Takeaways From The Article

Also, something to note here is that even if the pattern holds, the price might not immediately go up. As the S2F deflection chart shows, BTC touched the trend line twice in 2017 before shooting back up.

Bitcoin To Surpass $120,000 In A Year, Says Pantera CEO

Pantera CEO Dan Morehead has recently revealed his predictions for the price of bitcoin going forward. The CEO runs Pantera Capital, which runs the first bitcoin fund that was launched in the United States. Pantera’s bitcoin fund was launched in 2013, back when the digital asset was worth only $65 per coin.

Given the impeccable timing of when the fund got into bitcoin, it is not surprising that the founder’s thoughts are taken seriously in the cryptocurrency space.  The fund continues to see continued support as more institutional investors are getting into the digital asset. Seeing the recent price dips as a buying opportunity to get into the pioneer cryptocurrency.

Related Reading | On-Chain Expert Predicts $162K Bitcoin Peak This Cycle

A report from Reuters outlined a couple of price predictions made by the fund manager regarding the price of bitcoin. Morehead talked about where he sees the price ending and increased regulatory actions being taken against cryptocurrencies.

Mainstream Adoption To Push Bitcoin Higher

Talking about where bitcoin will be by the end of 2021, Morehead put the price of the digital asset at as much as $80,000 and $90,000 by the end of the year. Morehead also put the price of the digital asset at over $120,000 within the span of a year.

Declining momentum in bitcoin price | Source: BTCUSD on TradingView.com

Going further with the predictions, CEO Dan Morehead put the price of the digital asset at as high as $700,000 in the next decade. The recent price dips and volatility do not seem to faze the fund manager as his price predictions continue to be on the high side.

Morehead’s predictions come despite speculations in the market being the cryptocurrency market might well be headed in the direction of a long bear market.

Increased Regulation Crackdowns In The Market

Talking about where regulation in the market is headed, the Pantera CEO explained that going forward, there would be increased regulatory scrutiny in the market. Pointing to the regulatory crackdowns that Binance has experienced in different countries recently. Morehead referred to the increased regulatory scrutiny as a “transition” phase for the crypto market.

The crypto market in general has seen increasing regulatory debates from countries around the world. United States lawmakers continue to introduce bills aimed at providing proper regulations for the crypto market.

Related Reading | Bitcoin Is More Oversold Than It Was At ATH In April, Says Analyst

Meanwhile, other countries continue to show favorable trends for cryptocurrencies. Earlier in the year, El Salvador’s president announced that the country would be accepting bitcoin as a legal tender. This is scheduled to go into full effect in September of this year.

Dan Morehead’s fund, Pantera Capital, currently manages $2.8 billion in blockchain-related assets. And the fund has invested in crypto exchanges including Coinbase and Binance.

Featured image from PYMNTS.com, chart from TradingView.com