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.
Bitcoin -10% feels mild given S&P futures limit down
84% of US stocks are owned by the 10% richest households, a majority of which are Boomers with no allocation to bitcoin
Millennials who own bitcoin also have a small allocation to stocks
➡️Less liquidations & margin calls pic.twitter.com/VaSAd3bpe9
— skew (@skewdotcom) March 9, 2020
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.”
$BTC Fear & Greed
Extreme Fear is warranted for now. But, will eventually be capitalized on
Typically, the only way out of these scenarios is to bounce out. They push until pushed back
The novice should stay on the sidelines
Pros should enjoy the volatility
Expect turbulence pic.twitter.com/oauGXi4KhK
— Mr. Anderson (@TrueCrypto28) March 9, 2020
Interestingly, despite the bloodbath in the crypto street, bitcoin is spot on the S2F track.
— PlanB (@100trillionUSD) March 8, 2020
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.
— Preston Pysh (@PrestonPysh) March 8, 2020
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.
The collapse in oil and the collapse in yields are both unprecedented and exceed the chaos of 2007-2009 today. The algorithms operated all night as if trillions of dollars were trading……Uncharted waters
— Jim Cramer (@jimcramer) March 9, 2020
Must say I have been getting progressively more bearish. Situation in China may be worse than I believed. Particularly so supply chains. And the crude oil implosion will bankrupt US shale and wreak havoc across credit.
— Alex Krüger (@krugermacro) March 9, 2020
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.
As the price of #Bitcoin dropped 6.5% over the last 24 hours, our actionable signals indicate bearish sentiment.
– The network is growing slower
– Fewer addresses in the money
– The number of large transactions dropped
– Smart price and Bid-Ask Volume show negative numbers pic.twitter.com/NHWVR6b35P
— intotheblock (@intotheblock) March 9, 2020
For bitcoin price, the bearish scenario could see the digital asset crashing to $5ks.