Bitcoin

April

<h2 id="quick-take">Quick Take</h2>
Bitcoin’s Stock-to-Flow (S/F) Ratio, a model built on the premise that scarcity fuels value, appears to be regaining its predictive force.
Historically, <a href="https://cryptoslate.com/coins/bitcoin/" rel="noopener noreferrer nofollow">Bitcoin’s</a> price has moved in tandem with the S/F ratio, making it a potentially useful tool for predicting future valuations.
However, the model deviated from predictions around April 2021, during the bull market run. Interestingly, with the halving five months away, Bitcoin’s trajectory seems to have realigned with the S/F ratio. Although still $65,000 short of the model’s prediction, the trend indicates a positive direction.
<figure id="attachment_372132" aria-describedby="caption-attachment-372132" style="width: 100%" class="wp-caption aligncenter">
 <figcaption id="caption-attachment-372132" class="wp-caption-text">
 Graph showing Bitcoin’s Stock-to-Flow ratio from 2010 to 2023 (Source: <a href="https://studio.glassnode.com/metrics?a=BTC&amp;m=indicators.StockToFlowRatio" rel="noopener noreferrer nofollow">Glassnode</a>)
 </figcaption>
</figure>
The S/F deflection, measuring the divergence between the current Bitcoin price and the S/F model, suggests Bitcoin is still significantly undervalued. This is based on the model’s assumption that a deflection greater than or equal to 1 indicates Bitcoin is overvalued and vice versa. Notably, the only time Bitcoin was deemed more undervalued according to this model was during the FTX collapse in 2022.
<figure id="attachment_372133" aria-describedby="caption-attachment-372133" style="width: 100%" class="wp-caption aligncenter"><img class="wp-image-372133 size-full" src="https://cryptoslate.com/wp-content/uploads/2023/11/deflection-.png" alt="Stock to flow deflection: (Source: Glassnode)" width="1800" height="1013" srcset="https://cryptoslate.com/wp-content/uploads/2023/11/deflection-.png 1800w, https://cryptoslate.com/wp-content/uploads/2023/11/deflection--300x169.png 300w, https://cryptoslate.com/wp-content/uploads/2023/11/deflection--1024x576.png 1024w, https://cryptoslate.com/wp-content/uploads/2023/11/deflection--768x432.png 768w, https://cryptoslate.com/wp-content/uploads/2023/11/deflection--1536x864.png 1536w" sizes="(max-width: 1800px) 100vw, 1800px">
 <figcaption id="caption-attachment-372133" class="wp-caption-text">
 Graph showing the Stock-to-Flow deflection from 2010 to 2023 (Source: Glassnode)
 </figcaption>
</figure>
The post <a rel="noopener noreferrer nofollow" href="https://cryptoslate.com/insights/bitcoins-scarcity-model-hints-at-massive-undervaluation/">Bitcoin’s scarcity model hints at massive undervaluation</a> appeared first on <a rel="noopener noreferrer nofollow" href="https://cryptoslate.com">CryptoSlate</a>.

Bitcoin’s scarcity model hints at massive undervaluation

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