Bitcoin Currently Overvalued By Stock-To-Flow Standards

Tony "The Bull" Severino

1 year ago

3 mins read

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According to Plan B’s now famous stock-to-flow model, the price of Bitcoin can be expected to reach prices of $100,000 to $1 million per coin eventually. The theory is based on the cryptocurrency’s scarce supply.

However, looking at the Bitcoin daily stock-to-flow chart, the crypto asset is currently overvalued compared to past cycles. Here’s what this could mean – both bullish and bearish – for the leading cryptocurrency by market cap based on this hypothetical comparison.

Bitcoin Overvalued According Stock-To-Flow Model Comparison With Past Cycle

Bitcoin has recently come into favor and fame, primarily due to the cryptocurrency’s hard capped, 21 million BTC supply. With even less in circulation, and millions more suspected to be lost or locked away forever, it is potentially the hardest form of money ever known.

Comparisons with gold – another asset with a limited supply – has benefited the cryptocurrency, which has been pitched as the digital version the precious metal.

Certain models have been created to attempt to affix a valuation to gold based on its scarcity, and such a model was in the past adapted to Bitcoin by a pseudonymous analyst named Plan B.

The stock-to-flow model has been widely cited from CNBC anchors to other crypto analysts and is among the most sworn by standards in the cryptocurrency community. The model projects each BTC to eventually be worth $100,000 to $1 million and more per coin, and price action has historically traced along perfectly.

Bitcoin is above the median of the stock-to-flow model, compared to the last bull market | Source: Plan B on Twitter

Forget The Noise, Buy BTC And Hold For The Long Haul

“Like clockwork” the model continues to work, albeit for one difference visually between this cycle and the last. Bitcoin is currently above the median on the stock-to-flow model, suggesting it is currently overvalued compared to the last cycle.

All instances where price action deviated above the median – dating back to 2011 and most recently with the 2019 peak – have resulted in a steep correction back below it.

This could mean one of two things: The current cycle is far more bullish than in 2017 and is approaching the final wave of the current uptrend before correcting, or, a correction is coming sooner than later before the uptrend resumes to $100,000 per coin and more.

In the end, does it really matter the price per coin currently, or when the cryptocurrency corrects? With Bitcoin tracing along the stock-to-flow model “like clockwork” again and again, and only deviating above it, not below it, buying at any time and holding it long enough will yield results regardless.

Featured image from Deposit Photos

Tony "The Bull" Severino

Tony "The Bull" Severino, CMT, is a distinguished figure in the cryptocurrency analysis sector, renowned for his in-depth technical expertise and innovative approach to market trends. As the Head of Research at NewsBTC, Tony leads a team dedicated to providing cutting-edge insights and forecasts, helping both novice and experienced traders navigate the complexities of the crypto market.
A seasoned Chartered Market Technician, Tony's prowess in identifying and capitalizing on market patterns is unmatched. His academic and professional journey in market analysis has firmly established him as a leading authority in technical trading strategies. Tony’s approach is heavily influenced by the principles of Elliott Wave Theory, a method known for its rigorous assessment of investor psychology and price movements.

Beyond his role at NewsBTC, Tony is the visionary founder of CoinChartist.io, an educational platform aimed at demystifying the nuances of cryptocurrency trading. CoinChartist.io serves as a valuable resource for traders seeking to enhance their technical analysis skills. The platform offers a range of learning tools and resources designed to empower traders with the knowledge to make informed trading decisions.

In addition to his educational initiatives, Tony is a prolific author and a dominant voice in the crypto community. He writes the CoinChartist VIP newsletter, a weekly dispatch that has become a staple among crypto enthusiasts, revered for its insightful analysis and actionable trading advice. This newsletter has consistently ranked as a best-seller on SubStack, boasting thousands of subscribers who rely on Tony’s expertise to guide their trading strategies.

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Before his ascent in the financial analysis world, Tony honed his skills in journalism. His background in this field has endowed him with a unique ability to present intricate market dynamics in a clear and compelling manner, making his insights highly sought after by a broad audience that ranges from casual readers to professional traders.
His professional affiliations underscore his commitment to excellence and continuous learning. As a partner of Elliott Wave International and TradingView, Tony collaborates with other leading experts to enhance his knowledge and skills. His active membership in the CMT Association further aligns him with the highest standards of industry practices and ethics.

Tony’s nickname, "The Bull," aptly reflects his aggressive and optimistic outlook on the cryptocurrency markets. His forecasts often anticipate significant upturns, earning him a reputation for bullish predictions that have frequently led to lucrative outcomes for those who follow his advice.

In summary, Tony "The Bull" Severino, CMT, is more than just a technical analyst; he is a mentor, educator, and innovator whose influence in the cryptocurrency space continues to grow. His dedication to advancing the understanding of market forces and his commitment to providing high-quality, reliable analysis make him a pivotal figure in the world of cryptocurrency trading.

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