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Pre-Halving Rally: Bitcoin Just Bounced From Stock-to-Flow Baseline

Tony Spilotro by Tony Spilotro
2 years ago
in Bitcoin, Cryptocurrency news
Reading Time: 3 mins read
Advertisement

Since the start of 2020, talk of the upcoming Bitcoin halving has caused the first-ever cryptocurrency and the rest of the crypto market to skyrocket out of control.

It’s only this past week where a pullback occurred, caused by coronavirus-related market-wide panic. But despite the selloff, Bitcoin remains bullish, bouncing off the stock-to-flow baseline that suggests the asset’s value will rise exponentially after the halving this May.

Bitcoin’s Halving Is on the Horizon

There are few narratives that surround Bitcoin that have as loud of an echo chamber as the upcoming halving scheduled for this coming May 2020.

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The crypto market has been anxiously awaiting the halving since the crypto market downtrend first began, as it is expected that the reduction in Bitcoin supply caused by the halving, will cause an imbalance of supply and demand that causes prices to surge.

Related Reading | Bitcoin To Explode By 80% Before Halving According to Past Cycle Comparison 

Each pre-coded halving reduces the block reward miners receive by half, hence the appropriate name of the event.

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Because much of Bitcoin’s value is based on its digital scarcity, the event is especially notable.

It’s so notable, that a stock-to-flow model has been developed to track Bitcoin’s price progression based on that scarcity.

This model is highly cited throughout the crypto industry and even in mainstream finance, and points to Bitcoin reaching prices of $55,000 following the halving.

First-Ever Cryptocurrency Bounces From Stock-to-Flow Baseline

The model includes a 10-day and one-year baseline moving average, along with another moving average depicting the difference in actual price versus what the stock-to-flow model projects.

According to that projection, Bitcoin just bounced perfectly at the 365-day baseline.

When in doubt, zoom out. #Bitcoin

A few weeks before every halving, #Bitcoin touched the #s2f model price. This time it is no different.

S2F 10D: $9.303
S2F 365D: $8.317
Average: $8.810

Current Price: $8.811

Chart:@digitalikNet
Model:@100trillionUSD pic.twitter.com/r2tRvcQZLh

— CryptoKea (@CryptoKea) February 27, 2020

During the two previous Bitcoin bear and bull cycle, the crypto asset did the same just ahead of the halving, before going on a monster rally.

Just ahead of the halving, that monster rally was sold back down to the same baseline, where it bounced yet again.

However, the last bounce was the final major dip before Bitcoin took off into a full-blown bull market.

This time may be different, though. Bitcoin now has stiff competition from the rest of the altcoin market, and the greater financial market is in turmoil following fears over a possible pandemic, impending war, and a total global economic meltdown.

Related Reading | Bitcoin Halving Overhyped: Previous Cycle Led to Another 6-Month Crypto Winter

Although the asset was designed to replace overextended fiat currencies in the face of an economic recession, the high-risk speculative asset may be too young at this phase in time to serve that ultimate goal.

A collapse of the monetary system could create too much fear for investors to consider the asset class, even with a catalyst like the halving ahead.

With so much at stake at this current time in crypto, Bitcoin’s fate currently hangs in the balance.

Tags: bitcoinBitcoin Halvingcryptohalvingstock to flow
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Tony Spilotro

Tony Spilotro

I'm Tony Spilotro. Behind the pseudonym, I'm a global remote work leader with a decade of award-winning content experience and excellence. Here, I explore my newfound passions pertaining to privacy, finance, economics, politics, cryptography, property rights, and other libertarian-esque views. I am a Bitcoin evangelist, maximalist, and educator whenever I can be, helping to spread its message of freedom from government control, monetary policy mismanagement, and passing the buck - literally – to future generations. My journey from a curious retail crypto investor to a serious Bitcoin advocate, trader, and technical analyst is an unusual one, but life-changing nonetheless and has become less about money and more about a long-overdue revolution. While a firm believer in the laws governing math and science, I am profoundly fascinated by the impact of astrology and astronomy including moon and solar cycles and planetary alignment and their ability to influence and potentially predict markets. It hasn't yet clicked for me as to how to put anything to use, but I consider it my current rabbit hole I can't yet dig out of. My perspective of growing up alongside the internet, the dot com era, the Great Recession, and roots in video games collecting coins and rare items caused Bitcoin to immediately make sense to me. Through all of these lenses, I seek to produce content that is educational and entertaining, and I thank you sincerely for taking the time to read what I have to say. Please follow me on Twitter at @tonyspilotroBTC and feel free to drop me a line if you would like to work together.

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