đ¨ Bitcoin Alarm Bells Ringing: 2021 & 2024 Top Signal Reappears â Time to Sweat?
Bitcoin's rally might be running on fumes. A critical technical indicatorâthe same one that flashed before the 2021 and 2024 market topsâjust lit up again. Cue the sweaty palms.
The ghost of crashes past
History doesnât repeat, but it sure loves to rhyme. The current setup mirrors the eerie calm before previous 30%+ plunges. Retail FOMO is pumping, leverage is stacking, and whales are quietly edging toward exits.
Whatâs different this time?
Institutional inflows could cushion a drop, but the smart moneyâs hedging. Meanwhile, crypto Twitterâs âdiamond handsâ brigade hasnât noticed their favorite metric now screams âoverboughtâ louder than a Wall Street intern during bonus season.
One truth remains: markets climb walls of worry⌠until they donât. Whether this is a blip or the start of another âcrypto winterâ depends on who you askâthe bulls loading up, or the bears sharpening their claws.
Bitcoin Stock-to-Flow Model Signals Overvaluation
Top analyst Darkfost recently shared insights on X, highlighting the significance of the Bitcoin Stock-to-Flow reversion (S2F) chart as a reliable indicator to assess Bitcoinâs valuation cycles. According to Darkfost, when the S2F metric rises above a value of 3, it typically indicates that Bitcoin is entering an overheated phase, signaling a high probability of a market correction. Currently, the S2F value is approaching this critical threshold, prompting Darkfost to caution investors that it may be an opportune moment to lock in profits before a deeper correction unfolds.
Darkfostâs analysis points to historical patterns where similar S2F readings have preceded substantial price declines. In September 2021, Bitcoin dropped from $63,500 to $30,800 after the S2F metric crossed into the overvaluation zone. Again, in November 2021, BTC crashed from $67,000 to $15,800 following a peak S2F signal. More recently, in March 2024, Bitcoin corrected sharply from $73,000 to $54,000 after entering overheated territory.
This preset alert system, designed for long-term market participants, serves as a strategic tool to help investors navigate Bitcoinâs volatile cycles. While the current correction might seem abrupt, Darkfost emphasizes that such pullbacks are essential for the market to reset and build a sustainable foundation for future growth. Investors are urged to remain cautious and monitor the S2F chart closely as Bitcoin navigates this critical phase.
BTC Struggles To Reclaim The $115K Level
Bitcoin is attempting to recover after its recent decline, currently trading around $115,019 as shown in the 8-hour chart. The price has managed to bounce from the $112K support zone but faces strong resistance at the $115,724 level, which previously acted as a key support during the two-week consolidation range in July.
The 50-day and 100-day simple moving averages (SMAs) are now positioned just above the current price, adding to the overhead resistance. The 200-day SMA around $110,677 continues to provide solid support, keeping the overall uptrend intact for now. However, BTC must reclaim the $115,724 level and consolidate above it to regain bullish momentum.
Volume has been relatively low during the recent bounce, suggesting a lack of strong buying conviction. If Bitcoin fails to break above the $115K resistance decisively, it risks falling back to test the $112K zone again. On the upside, a successful breakout above $115,724 could open the path to retest the $122,077 all-time high resistance.
Featured image from Dall-E, chart from TradingView
