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- Recent data from Glassnode suggests potential bullish cycles as BTC’s stock-to-flow ratio hits a one-month low.
- Ahead of the halving, committed long-term Bitcoin holders are accumulating in anticipation.
The influence of Bitcoin’s limited supply on its value over the long term has been an extensively debated and examined subject in the cryptocurrency sphere. Experts have crafted various models that offer perspectives on the correlation between these factors, aiding investors in prudent choices.
In a recent publication by the on-chain analytics company Glassnode, it’s highlighted that BTC’s stock-to-flow (S/F) ratio recently reached a one-month nadir, implying potential for forthcoming bullish cycles.
— glassnode alerts (@glassnodealerts) August 19, 2023
Bitcoin’s value driven by its scarcity
In simple terms, the S/F deflection gauges whether an asset’s worth is high or low relative to how rare it is. In the current context, the deflection stood at less than one and, as mentioned earlier, further into the green zone of undervaluation. Calculated by dividing Bitcoin’s price by one of its prominent metrics, the S/F ratio, established by the pseudonymous analyst PlanB, this ratio compares Bitcoin’s existing supply with the quantity of new Bitcoins generated annually.
The underlying principle behind this model asserts that an asset’s value is directly linked to its scarcity. The ratio’s elevation corresponds to increased scarcity, propelling the asset’s price. The model indicates that halving events, which take place approximately every four years and involve halving the rate of newly mined coins, directly impact Bitcoin’s price.
Glassnode’s data provided additional validation for this concept. Observe how Bitcoin’s price remained restrained in the days leading up to the halving. Nevertheless, after its completion, the price surged to reach new peaks.
Resolute holders accumulating
The optimistic outlook driven by the halving prompted steadfast long-term Bitcoin investors to accumulate in preparation for the significant event. Currently, experienced holders of the leading cryptocurrency constitute 75% of the total tokens in circulation. Its value stood at $26,090 at the time of writing this.
Expert Strategist Michaël van de Poppe Unveils Optimal Timing
Discovering the prime junctures to venture into altcoins and detecting signs of market transformation has just been demystified by acclaimed crypto strategist Michaël van de Poppe. While conventionally assumed that the optimal time to dive into altcoins is post-Bitcoin’s all-time high (ATH), van de Poppe challenges this belief, unveiling a more lucrative window. According to him, the golden opportunity arises eight to 10 months ahead of the Bitcoin halving.
This is usually the case when nobody expects it. Quite frequently, if you look at a historical perspective, the best period to buy #Altcoins is after the Bitcoin ATH.
That would mean that there’s such a large… pic.twitter.com/oyCOSYx9Mg
— Michaël van de Poppe (@CryptoMichNL) August 19, 2023
Termed the ‘Time Capitulation,’ this period witnesses a dip in confidence, paving the way for potential altcoin investment prospects. Bitcoin pairs assume a pivotal role in this phase, with USD valuation potentially tapering yet not plummeting as drastically as Bitcoin.
Tracing historical trends, van de Poppe highlights the ETH/BTC pair’s cycle low in September 2019 and October 2015, coinciding precisely with 252 days before Bitcoin’s halving events. Following these lows, altcoins rallied, with decentralized finance (DeFi) tokens, including LINK/USD, witnessing substantial growth.
In the face of prevailing recession concerns, van de Poppe remains bullish, drawing inspiration from past market narratives. His advice echoes with optimism: hold existing positions and consider altcoin investments if unexplored, proposing a two-year investment horizon.
While Bitcoin and Ether tread steadily, prominent tokens like Ripple XRP/USD, Dogecoin DOGE/USD, and Shiba Inu SHIB/USD show marginal retreats, as per CoinGecko data.
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