Despite reaching a new yearly-high recently, the Bitcoin velocity metric is still far from the previous bull runs. It means that investors are mainly regarding BTC as a store of value instead of a medium of exchange and hinted that the ongoing bullish cycle is far from its top.
Store of Value Status Says BTC’s Velocity
According to the analytics company CryptoQuant, Bitcoin’s velocity is a “measurement of the rate at which BTC is circulating in the economy.” In other words, it shows if the primary cryptocurrency is generally used as a means of payment – if there’s high activity on the network – or as a store of value – in case the activity is lower.
More recent data from the company indicated that the velocity had started to increase in mid-2020 and has reached a new two-year high. Nevertheless, it’s still far away from the tops during the previous bull cycles in 2013 and 2017, suggesting that there’s still more room for growth for BTC during the current run.
Additionally, CryptoQuant said each cycle top has previously displayed a “considerable bearish divergence” on this indicator. However, the company noted that “none have been formed” during this cycle yet.
Could Bitcoin Do Another 4x from Here?
If we assume that CryptoQuant’s data is indeed showing that BTC has not reached its top yet, it’s worth exploring a few viable price projections recently made by proponents or showcased by indicators to determine where that peak could be.
Max Keiser, the host of Keiser Report, envisioned a price tag of $220,000 by the year’s end. Separately, the stock-to-flow model sees BTC at $288,000, and the Long-Term Holder MVRV metric also showed that bitcoin could indeed reach those levels if history is to repeat itself.
Bitcoin’s Reserve Risk indicator has a similar number in its sights as well. The metric used to assess the confidence of long-term holders relative to the price of the asset is still relatively low despite BTC’s price surge since October 2020.
CoinMetrics data shows that the last time the Reserve Risk was at such levels as now, bitcoin’s value increased by roughly 4x in the following few months. If this is to transpire again, BTC will jump well-above $200,000.
Published at Tue, 23 Mar 2021 14:13:18 +0000