Tuesday, July 27, 2021

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    Great buying opportunity? Bitcoin trades 59% below the stock-to-flow model target

    Bitcoin (BTC) has never been as below its target price as it is now, the stock-to-flow model shows this week.

    In a tweet of 10 July, Lex Moskovski chief investment officer of Moskovski Capital, showed that the stock-to-flow model marked a historic moment in the twelve years of Bitcoin’s life.

    “A great buying opportunity”

    With the BTC/USD pair showing little sign of an organic upswing, BTC has been moving further and further away from the price that the stock-to-flow thinks it should have.

    Stock-to-flow is arguably the most popular of the prediction models for Bitcoin, and has historically tracked BTC price action with impressive accuracy, taking into account every anomaly to remain valid.

    However, as we told you above, current behavior is testing the stock-to-flow model, and currently, its comparatively target price has never been so far from reality.

    “The negative deviation from stock-to-flow is the highest seen in the entire history of Bitcoin,” commented Moskovski.

    “This is a great buying opportunity, if you believe in this model.”

    Deviation of the stock-to-flow model of Bitcoin against the chart of the BTC/USD pair. fountain: Lex Moskovsky

    According to the stock-to-flow multiple, the BTC/USD pair should be trading at USD 82,703 today, Saturday, July 10, 2021. At the close of this edition, the actual spot price was USD 33,850, 59% less than the estimated price.

    The creator of the model, PlanB, has maintained its upward bet on the price of Bitcoin for 2021, its latest price prediction pointed to USD 135,000 for December in the “worst case scenario”.

    The analyst is currently disconnected from the digital world and does not comment on events, promising to return in August, which has a minimum price target of around USD 47,000.

    Bitcoin stock-to-flow model as of July 10. Source: BuyBitcoinWorldwide.com

    The model faces serious bearish predictions

    PlanB has never ruled out that the stock-to-flow model will be invalidated at some point, and this could be a reality if the more bearish scenarios come true.

    Among them is the warning of a fall to the $10,000 level suggested by Scott Minerd, the Guggenheim executive who this week Said that there was “no reason” to buy Bitcoin under current conditions.

    Other data point to a prolonged recovery period for Bitcoin fundamentals, while December could bring selling pressure once again, in line with historical precedent.

    The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risks, you should conduct your own research when making a decision.


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