- Negative stock-to-flow deflection highest in the history of Bitcoin markets
- Whales and long-term accumulators are buying BTC en-masse
- US dollar’s technical setup on the daily chart looks bearish
- The US Federal Reserve plans to keep its benchmark interest rate near zero
- RSI and Bitcoin’s price action signal bullish divergence
JAIPUR (Coinchapter.com) – New to Bitcoin and thinking about buying a few sats or even a whole coin? Well, it just might be the right time to douse the noise in your mind and go for it. But, of course, this is true for traders/investors looking to enter new positions as well. Here’s why.
First off, negative stock-to-flow deflection. According to PlanB’s famed Bitcoin Stock-to-Flow (S2F) model, the benchmark cryptocurrency should have been trading at $82,703.73, Twitter-based S2F model tracker, S2F Multiple noted. Instead, BTC is way off the target price by almost 60%.
To put it in simpler words, Bitcoin price is testing the bottom of the channel on the S2F chart. As PlanB said in a rebuttal to an article mentioning that his propounded model is losing significance, “Nah .. S2F model is not “off course”.. just touching lower bands (just like Jan 2019 and Mar 2020)”.
Historically, significant upsides have followed Bitcoin’s bottom revisits on the S2F model chart. One of the reasons why Lex Moskovski, Chief Investment Officer at Moskovski Capital, feels that it is a “great buying opportunity” for BTC.
“Negative Stock-To-Flow deflection is the highest it’s ever been in the whole #Bitcoin history. This is a great buying opportunity if you’re a believer in this model.”, he said in a tweet.
Long-Term Accumulators Accumulating
Apart from Bitcoin’s bottoming move on the S2F model, a look at the buying behavior of long-term holders also confirms BTC’s bullish bias. While posting the below chart in one of his recent tweets, Amsterdam-based trader and technical analyst Michael van de Poppe said, “Long-term holders are accumulating #Bitcoin heavily again. So should you.”
According to the above Glassnode data, the total supply held by long-term BTC holders fell sharply from 12 million coins to near 10 million coins at Bitcoin’s $65,000 price peak in the last rally. Quite possibly because investors sense the top is in. Buying resumed again as the flagship cryptocurrency started slipping lower. With more than 50% plus price crash in May to sub-$30,000 levels, accumulation picked up sporadically again.
Historically seeing, the increased accumulation by long-term Bitcoin holders has kept prices buoyed, eventually creating the setup for the next leg of a bull rally.
Bearish Dollar Good For BTC
Since Bitcoin mainly trades against the US dollar, the latter’s market momentum heavily influences BTC’s price action. Both share an inverse correlation. At least that’s what’s the trend has been like for the past year.
DXY’s current technical setup is one of the reasons why Bitcoin is worth a buy right now. The daily chart of the DXY index (which measures the strength of the greenback against a basket of other prominent currencies) has posted a classic bearish sign. In a monstrous uptrend that has been on for more than a month, the index achieved a monthly high of 92.86 points. This uptrend now shows signs of reversal, as DXY dropped to 92.35 (at the bottom of a bear flag pattern), and continued slipping down to 92.093.
Although DXY is still hovering over the crucial 20-day exponential moving average (EMA) wave, the index risks dropping to 38.2% (91.58) and 50% (91.19) Fibonacci retracement levels.
Combining this with the Federal Reserve’s decision to keep its benchmark interest rates near zero until the US economy is well outside the clutches of the COVID-19 induced recession makes Bitcoin buying all the more plausible right now.
Bitcoin’s RSI In Bullish Antithesis To Price
Bitcoin’s price is in a downtrend. But, the benchmark crypto asset’s RSI is in an uptrend.
This type of technical setup points to an upcoming bullish scenario. It is an indication that a particular asset is oversold, its bearish pressure has completely died down, and that it’s ready to chart news highs.