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Bitcoin: Analyzing how the next halving event might affect BTC

Press Releases Crypto News AMB-Crypto Bitcoin: Analyzing how the next halving event might affect BTC

As per stock-to-flow deflection, Bitcoin was undervalued in relation to its scarcity.
Long-term holders had access to 75% of Bitcoin’s circulating supply.

The impact of Bitcoin’s [BTC] scarcity on its long-term value has been one of the most widely discussed and analyzed topics within the crypto community. Over the years, experts have developed several models that provide insights into the relation between the two and help investors make informed decisions.

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According to a recent post by on-chain analytics firm Glassnode, BTC’s stock-to-flow (S/F) deflection dipped to a 1-month low, suggesting more room for bull cycles in the near future.

Source: Glassnode

Bitcoin’s scarcity to drive its value

In layman terms, the S/F deflection determines whether an asset is overvalued or undervalued in relation to its scarcity. In the current situation, the deflection was less than 1 and as indicated above, deeper in the green undervalued territory.

The S/F deflection is derived by dividing Bitcoin’s price by one of its most popular models, the S/F ratio. Created by anonymous analyst PlanB, the S/F ratio compares the current stock of Bitcoin to the number of new Bitcoins mined each year.

The narrative which underpins this model is that the value of an asset is directly proportional to its scarcity. The higher the ratio, the scarcer the asset becomes, and in turn drives the price.

The model states that the halving events that occur roughly every four years — when the rate of new coins mined is halved— directly affect the price of B

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Author: Aniket Verma

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