BTC Price Still on Stock-to-Flow Track Despite ‘Extreme Fear’ & ‘Bearish Sentiment’

  • Market in “extreme fear” is an opportunity rather than “panic”
  • Bitcoin still spot on S2F track but network signals indicate “bearish sentiment”

2020 started on a positive note. We kicked off this year at around $7,200 and climbed to above $10,500, recording about 45% gains on a year-to-date basis.

However, the spread of coronavirus all over the world soon took over the global markets, which had bitcoin acting as a risk on market as well. As the deadly virus continues to spread notwithstanding the central banks announcing stimulus, the global markets recorded substantial losses.

For the past three weeks, bitcoin has been tumbling only to see positive momentum last week. But not for long.

The oil price war on the weekend hit the already weak markets. Bitcoin also dropped over 16%, all over again, going as low as $7,685.

An opportunity rather than “panic”

According to Crypto Fear & Greed Index, the market is in “extreme fear” with a reading of 17. However, commentators say this is an opportunity rather than “panic.”

Interestingly, despite the bloodbath in the crypto street, bitcoin is spot on the S2F track.

Bitcoin price is exactly in line with the value put by the stock-to-flow model. The daily RSI is also below 40, meaning it could be a good buy the dip opportunity.

The S2F model puts bitcoin’s price at $8,636 while the actual price is currently just above $7,900.

Meanwhile, Fundamentals Turns Bearish

When it comes to the fundamentals, with the continued increment in the hash rate and difficulty adjustment in the network while price drops, many miners will be in loss that would propel them to sell their BTC to stay afloat.

The global scenario is not presenting a good picture, with oil price war started on the weekend further adding to the pressure on the market.

As we saw in 2020, the external factors have been affecting the price of bitcoin. Besides price, the network is growing slower, and there are fewer addresses in the money, shared crypto data provider IntoTheBlock. Moreover, the number of large transactions dropped with smart price and bid-ask volume showing negative numbers as well.

For bitcoin price, the bearish scenario could see the digital asset crashing to $5ks.

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Author: AnTy

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