Bitcoin's value was worth only about 0.2 of what it should ideally be as per the stock-to-flow model, suggesting room for exponential growth.
, BTC’s stock-to-flow deflection dipped to a 1-month low, suggesting more room for bull cycles in the near future.In layman terms, the S/F deflection determines whether an asset is overvalued or undervalued in relation to its scarcity. In the current situation, the deflection was less than 1 and as indicated above, deeper in the green undervalued territory.
The S/F deflection is derived by dividing Bitcoin’s price by one of its most popular models, the S/F ratio. Created by anonymous analyst PlanB, the S/F ratio compares the current stock of Bitcoin to the number of new Bitcoins mined each year.the value of an asset is directly proportional to its scarcity. The higher the ratio, the scarcer the asset becomes, and in turn drives the price.
The model states that the halving events that occur roughly every four years — when the rate of new coins mined is halved— directly affect the price of Bitcoin. Data from Glassnode further proved this. Note how BTC’s price remained subdued in the days leading to the halving. However, on completion, it exploded to new highs.At the time of writing, BTC was worth only about 0.2 of what it should ideally be as per the S/F model.
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