Home
News
- Bitcoin’s April 2021 rally had raised hopes of breaching $100k by the end of the year or even earlier
- Elon’s tweets and the Chinese crackdown slashed prices within a matter of few weeks taking it back to its February lows
- STF and spent output profit ratio (SOPR) suggest that $85k level will be breached within few months
It’s been over a month that Bitcoin’s price has remained below the 200 day moving average suggesting the onset of a bearish market. The larger sell-off was evident due external issues like harmful emissions via mining and rising gas costs.
Moreover, the ripple effect was also seen as Tesla declined to receive payments in Bitcoin as it went against the company’s motto of a sustainable environment for all. Prices have consolidated on the backdrop of the G7 summit where the US President Biden is poised to speak about cryptocurrency regulation.
On the technical side, Bitcoin continues to receive resistance at $42000 level and a support of $32000. At the time of writing, it continued to trade at $39500.
On-chain technical analysis strong
Bulls are gathering steam within Bitcoin as $40k is within sight but still remaining 38% away from it’s all time high. However, investors are wary of the uptrend as near short term holders continue to suffer losses.
A head and shoulder pattern suggests a long-term bearish trend if it breaches $30k anytime soon. The volatility seen over the past two months should not be seen as a surprise as historic downfalls have taken place in the past.
The SOPR data suggests that Bitcoin holders continue to sell their investments at lower prices to avoid huge losses. The pandemic induced sell-off in March 2020 has slowly started to wither off as the Crypto Fear and Greed Index is at its lowest.
Traders target $85k in the short term
It is not that Bitcoin’s price will hit $100k within a 24 hour trading period. It will have multiple landmarks before touching another peak since inception. Experts believe that breaching $85k would be crucial to scale the three-figure mark.
The price might trace its steps back to the stock flow line with new highs all throughout the year. Its acceptance as a legal tender in El Salvador has raised hopes of a long bullish trend.
An on-chain analysis suggests that the market has consolidated itself considerably and a large influx of new investors is also possible. It will push up the prices as demand spikes for Bitcoin.
The interest shown from smaller countries and regulatory authorities have been well received by investors. It’s not a time for Bitcoin investors to worry as markets are not gloomy anymore.
Stock to flow
Stock to flow is the ratio that compares the that if the asset suddenly vanishes from the face of earth then how much year will it require to reach the current level. The higher the number the higher the price.The S2F of gold is 59 and similarly for the BTC it is around 27. The BTC S2F is much lower than gold but the thing which gold misses is the Halving event. The halving event in BTC in 2024 will make the S2F of BTC greater than 60. This could push the price upto the $100K. One can deduce the price using the formula (Price= EXP(-1.84)*SF^3.36)) . This formula will make you reach a lower value but if we account for the lost BTC around its inception (approximately 1 million) then we can draw a trajectory of BTC to $85k in between 450 and 500 days. One can account for other factors in this calculation to account for realistic price projections.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
