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Is Bitcoin Overvalued Right Now?

Bitcoin is now overvalued by Stock-To-Flow standards.

According to Plan B’s stock-to-flow model, Bitcoin’s price can be expected to reach prices of $100,000 to $1 million per coin eventually. The theory is based on the cryptocurrency’s short supply.

But looking at the Bitcoin daily stock-to-flow chart, the crypto asset is now overvalued compared to the past cycles. Here is what this could mean – both bullish and bearish – for the leading cryptocurrency by market cap is based on the hypothetical comparison.

Bitcoin has recently come into fame and favor, basically because of the cryptocurrency’s hard-capped, 21 million BTC supply. With now less in circulation, and millions more suspected to be lost or locked away forever, it is probably the hardest form of money ever known.

Comparisons with gold have benefitted the cryptocurrency, which had been pitched as the digital version of the precious metal.

Specific models have been created to try to affix a valuation to gold based on its scarcity, and the model was in the past adopted to Bitcoin by a pseudonymous analyst named Plan B. The stock-to-flow model has been widely cited from CNBC anchors to other crypto analysts and it is among the most sworn by standards in the cryptocurrency community. The model shows each BTC to ultimately be worth $100,000 to $1 million and more per coin, and price action had historically been traced perfectly.

The model continues to work “like clockwork,” even though one difference is visually between this cycle and the last. Bitcoin is currently above the median on the stock-to-flow model, indicating that it is currently overvalued compared to the past cycle.

All instances where price action deviated above the median have resulted in a steep correction back below it.

This could implicate two things: The recent cycle is more bullish than in 2017 and it is approaching the final wave of the current uptrend before a correction comes sooner than later before the uptrend resumes to over $100,000 per coin.

With Bitcoin tracing together with the stock-to-flow model “like clockwork” again and again, and only deviating over it, buying at any time and holding it long enough will have results regardless.

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