As things stand, Bitcoin is undervalued. With PlanB’s floor model, which sees Bitcoin at 98,000 by the end of November, things should be tight. But on-chain data gives hope.
With the 98,000 US dollars (USD) targeted by Bitcoin analyst PlanB, which digital gold should reach by the end of this month, things should slowly become tight. This is what the author of the stock-to-flow model, one of the most popular BTC course models, wrote on Twitter.
Bitcoin is only at $ 57,636 at the time of writing and is therefore trading significantly below the targeted value. However, this is not yet an invalidation of the S2F model. Because the model only gives an average value, but cannot predict prices in the short term. Should there be a rally, even a year-end rally, the model will still be valid. At the moment, and it has to be said, according to the S2F model, BTC is clearly undervalued.
As things stand, the current correction is unlikely to mark a sustainable trend reversal. Because if you look under the hood of the Bitcoin blockchain, the market still looks healthy.
A look under the hood
The current all-time high of USD 69,000 had only printed an MVRV score of 3.7. However, the market is only overheated in the red area with a value above 7. So if you take the MVRV as a basis, Bitcoin still has room for improvement.
The MVRV is the relationship between the market value (MV) and the realized value (RV).
“If the market value is significantly higher than the realized value, this has in the past indicated a local top (red area), while the opposite indicates a market low (green area). Technically, the MVRV Z-Score is defined as the ratio between the difference between market capitalization and realized market capitalization ”, writes Glass node.
The exchange flows also contribute to the bullish sentiment in the long term – because they are declining. In other words, more BTC leaves the exchanges than flows into them. In the medium term, this was a bullish price indicator, as the supply on the market is declining.
Whether we will see the long overdue price rally in December is not clear from the data. But it comes – sooner or later.