Bitcoin Overheated? Stock-to-Flow Model Warns of Correction
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Bitcoin's recent price drop below $115,000 has sparked debate about its future direction. Analysts cite an “overheated” market, supported by CryptoQuant metrics showing excessive bullish momentum. This suggests a potential extended consolidation phase as the market resets, with the $112,000-$115,000 range a key battleground. Adding to the concern, analyst Darkfost points to the Bitcoin Stock-to-Flow (S2F) model. When the S2F value exceeds 3, it historically precedes significant price corrections. Currently approaching this threshold, Darkfost warns of potential profit-taking before a deeper correction. Historical examples cited include Bitcoin's drops from $63,500 to $30,800 in September 2021, $67,000 to $15,800 in November 2021, and $73,000 to $54,000 in March 2024, all following high S2F readings. While the current correction may seem abrupt, Darkfost emphasizes its necessity for market reset and future growth. Technically, Bitcoin is attempting recovery around $115,000, facing resistance at the $115,724 level and 50/100-day SMAs. Low volume suggests a lack of strong buying conviction. A decisive break above $115,724 could target the all-time high resistance, but failure to do so risks a return to $112,000. The overall situation remains uncertain, influenced by Federal Reserve policy, macroeconomic factors, market sentiment, and institutional demand.
