2020-9-4 04:00 |
Bitcoin’s halving is now in the past, and stock-to-flow formulas predict that the asset is ready to rocket out from current lows. But that’s yet to happen, and the crypto market is even crashing currently.
Here’s how this bull market is shaping up to have much “different” momentum this time around, according to one pseudonymous trader. According to the analyst and their theory on lengthening Bitcoin cycles, the slower momentum matches up precisely. Is this a sign that the stock-to-flow model is nonsense, and instead cycles are lengthening regardless of the halving?
Bitcoin Bull Markets Are Losing Momentum, But That’s Not BadThe cryptocurrency market on daily and weekly timeframes has had plenty of momentum behind it, helping to propel Bitcoin to a new 2020 high. Ethereum and most other altcoins followed, surging and setting new local highs.
But a selloff has begun, suggesting that the ultra-hot crypto market will be cooling off again for some time. If prices drop much further or remain sideways for an extended period, it would seriously call into question all supply-based theories such as the highly-referenced stock-to-flow model.
Related Reading | Bitcoin Breaks Below $11,000, How Deep Will The Selloff Go?
The S2F model created by Plan B looks at the cryptocurrency’s digital scarcity and block reward reductions called halvings that occur every four years.
The idea is that as supply is reduced from each halving, the value of Bitcoin should rise exponentially as a result. But the cryptocurrency is back trading in the $10,000s after spending only a month or so over $10,000 for the first time since 2019.
In 2019, crypto analysts expected new all-time highs, and the same exuberance is filling the crypto market with high hopes for 2020. But the rug may have just been pulled, and another similar fall like last year could put an end to supply-based theories for good.
But Bitcoin slowing down and losing some momentum isn’t a bad thing. Like 2019, getting too overheated can result in an extended drawdown. Bitcoin correcting now rather than in another $5,000 or so, may be a far healthier climb in the long run.
BTCUSD Monthly MACD Bull Market Momentum Comparison | Source: TradingView How Less Momentum Could Lead Cryptocurrency To Lengthening Market CyclesAs for how long that run may take, it could be a lot longer due to the waning momentum. That’s not to say that Bitcoin’s momentum isn’t strong, it just hasn’t anywhere near as strong as past bull market cycles.
According to crypto analyst Dave the Wave, the MACD on monthly timeframes has far less momentum behind it than past cycles.
This observance lends credence to the lengthening cycle theory that’s recently been picking up more steam the longer it takes for the crypto asset to moon.
Related Reading | Shock & Awe: Bitcoin Losing Momentum Could Result in Elliot Wave Correction to $1,000
Less overall momentum means a slower, healthier climb, and Bitcoin having a greater chance of becoming a stable, store of wealth in the long term. For now, the disruptive technology isn’t well adopted enough for volatility to decrease, but lengthening theories suggest this volatility – and momentum – decreasing over time will lead to a longer time between each new peak.
Chart comparisons between each Bitcoin cycle, show that there is a clear trend toward lengthening. Yes, the cryptocurrency also rose significantly out of each halving, but there’s currently far more evidence supporting lengthening cycles, including the MACD exhibiting far less momentum than past bull markets.
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