The crypto engine Bitcoin is gradually gaining momentum and prices are also tumbling on the altcoin market: the market is slowly getting hot again after the summer cool-down. The current edition of the Kryptokompass provides an outlook on the performance of the crypto key currency in the coming months, where we weigh up the pros and cons of a new bull run.
After the cold shower in May, the price thunderstorm on the crypto market had subsided for the time being. In June and July it was quiet, trading activities had shut down and Bitcoin went astray again on its knees below USD 30,000. However, the jolt came at the turn of the month. Some altcoins such as Cardano (ADA), Solana (SOL) or Terra (LUNA) have already ushered in the record high season. And there are also signs of an upturn in Bitcoin. This is supported by several indicators that we have dissected in more detail in the current edition of the Kryptokompass.
Practical test for stock to flow
The much-cited Stock-to-Flow-Model (S2F) from PlanB, which, despite the apparently crude method, has proven to be astonishingly precise even in bear markets, and even the price distortion in the middle of the year, provides a rough timetable for where Bitcoin is and where the journey could still go has captured, albeit at the lower end of the scale. But now, at the latest, the model is being put to the test: Even if Bitcoin continued to move at the lower end of the forecast, in December 135,000 US dollars would be on the counter, in the most bullish scenario even 450,000 US dollars. The next few months will therefore show whether the forecast proves to be reliable or whether it will be shelved as a lucky shot.
Fear and greed in crypto land
The fact that the mood is changing and investors are gripped by the crypto fever can also be seen in the Fear and Greed Index read, the meter by meter climbs into the “greedy” area. Admittedly, the sentiment barometer does not serve as an investment advisor. As a rough guide, however, the index provides an insight into the current investor sentiment and can therefore also be read as a guide for willingness to buy in the coming weeks. In the meantime, the index, which was a meager 10 points a month ago, has caught up to 70 points.
Google searches in a sideways trend
On the other hand, it looks a little less bullish with Bitcoin search queries via Google. Especially as a yardstick for the demand from (potential) small investors, the informative value of search queries should not be underestimated. Inquiries are slowly picking up again after falling sharply until mid-July. But they are still miles away from May Peak. With a view to the Google Trends, one cannot speak of a significantly increased demand.
Bitcoin reserves are falling
The Bitcoin reserves at the trading venues give a more bullish outlook. Since the end of July these have been falling sharply again. In other words: The trading venues are currently selling more Bitcoin than they are buying. A development that is directly correlated to the price development, as the graph from Glassnode shows. If the trend continues, increases in the Bitcoin price are the immediate result.
This development adds to the fact that the miners have not stopped their BTC sales, but have significantly reduced them. Since March, the Miner’s Position Index, a metric that puts expenditure in relation to reserves, with a value of just under zero, has shown that the majority of major Bitcoin suppliers hold their stocks together. This in turn causes a shortage on the market, which has a positive effect on the price development when demand increases.
There can always be surprising twists and turns in the highly volatile crypto market, but the outlook for the coming months looks increasingly promising. Positive on-chain data such as the throttling of the supply, coupled with a “greed-driven” investor sentiment could also send Bitcoin back on a rally that – if the stock-to-flow model is to be believed – new floors beyond the 100,000 he reached the mark by the end of the year. How realistic this scenario is, and what reasons could speak against an increase, you can read in addition to other exciting topics in the August edition of the crypto compass.