Bitcoin Shows Ideal Set Up For Epic Rally: Stock-to-Flow and Oversold RSI

Tony "The Bull" Severino

5 years ago

2 mins read

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Bitcoin price is in recovery mode, after the first-ever cryptocurrency suffered a record-breaking collapse and fall to under $4,000, shocking the crypto community and the world at large.

The selloff has led to extremely oversold conditions, according to the Relative Strength Index indicator. When combined with a Bitcoin valuation substantially below where the highly cited stock-to-flow model predicts, its the ideal setup for an epic rally, according to the theory’s creator.

Understanding Bitcoin’s Stock-to-Flow Model

Because Bitcoin is the first of its kind, and its use case has yet to be proven or implemented at speed or scale worthy of its potential, it is difficult to give the asset a proper valuation, and instead, price discovery is left to the constant tug of war between buyers and sellers.

However, few analysts have attempted to perform fundamental analysis on the crypto asset by looking at the asset’s hard-coded digital scarcity, rather than financial figures and manufacturing reports common across stocks.

One such model exists, called the stock-to-flow model, and it’s among the most popular and highly cited across the industry, even being the focus of discussion on episodes of CNBC’s Squawk Box.

The stock-to-flow model suggests that due to the upcoming halving that sees the BTC reward miners receive for validating each Bitcoin block slashed in half, it should immediately cause the fair price of Bitcoin to rise exponentially due to the rise in relative scarcity.

Crypto Meme: Can Oversold RSI Ahead of Halving Could Lead to an Epic Rally

However, Bitcoin‘s halving thus far has been nothing but a “meme” at which the crypto community can poke fun of. Jokes about how the halving has done nothing but cut the price of the asset in half, rather than inciting a new bull run, are commonplace.

But when the stock-to-flow model is combined with an oversold Relative Strength Index due to Bitcoin’s record-breaking collapse last month due to the coronavirus chaos, it would be the perfect setup for an epic rally.

#Bitcoin Stock-to-Flow (S2F) & Relative Strength Index (RSI) .. great setup: halving in 28 days and oversold pic.twitter.com/mRg6RORIza

— PlanB (@100trillionUSD) April 14, 2020

When the RSI reaches oversold conditions, assets typically bounce or reverse. A touch of the lowest point of the RSI also often signals a bottom is in.

With a bottom potentially behind us, RSI reaching oversold levels, and a grossly undervalued Bitcoin according to the stock-to-flow model, the recipe for the greatest bull run ever is here.

Especially when combining the coming hyperinflation expected due to the recession and the government’s response to stimulate growth devaluing fiat currencies, Bitcoin could reach valuations of $100,000 or more, as many analysts are predicting.

Featured image from Pixabay

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.

Tony is also celebrated for his literary contributions to the field. He is the author of the highest-rated Crypto Trading Journal on Amazon.com, a testament to his ability to communicate complex trading concepts in an accessible manner. This journal is widely regarded as an essential tool for traders aiming to track their progress and refine their strategies.

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.