The rate of new supply on Bitcoin is fixed, but it doesn't mean it all comes into the market...
If you have followed bitcoin for any length of time, you have likely heard about the stock to flow model by now...
It forecasts future prices based on the rate of new supply coming into the market compared with existing stockpiles and is often used to price commodities and natural resources.
PlanB is now infamous for applying this model to bitcoin and thus far achieving remarkably accurate price predictions to date.
However, there is something that could happen with bitcoin that could blow the model projects out of the water, in a positive way.
Right now, it projects the new supply being created each day mostly coming into the market, but what happens if it doesn't?
What happens if the publicly traded miners start using debt and equity to cover mining expenses and instead start hoarding all the new bitcoin they are mining each day?
I'll tell you what happens...
The price of bitcoin goes vertical and way higher than the stock to flow model is projecting in a specific time frame.
How likely is this to actually happen?
The first thing I thought and you were probably thinking as well when reading this is something like, "yea that's great buy how likely is that to actually happen?!"
Well, it's already happening...
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HUT and MARA are just two examples of publicly traded bitcoin mining companies that are starting to hold more and more inventory with the expectation that prices are going to continue climbing.
I suspect this trend is going to bleed over into other mining companies figuring out other ways of sustaining operations while being able to hoard more and more of the coins they mine.
The perfect storm is brewing...
The neat thing about this is that holding more bitcoin that's going up will cause the stock prices of these companies to rise, enabling them to issue more equity at higher and higher prices to fund operations.
This in term will allow them to hoard more and more bitcoin not putting much of it on the markets slowing price appreciation, a massively positive feedback loop.
If this trend catches on with other publicly traded miners, there is literally going to be no bitcoin available for new buyers to purchase at current prices.
The price will have no where to go but up and up and up until it reaches a point where sellers are comfortable selling again.
Given the current trajectory and momentum surrounding bitcoin currently, there aren't many people comfortable selling around current prices..
We literally have the perfect storm brewing right now for bitcoin.
Last year I was expected bitcoin to peak somewhere slightly over $100k during this cycle, however, now based on everything happened these last several months, a peak over $200k seems more likely.
Stay informed my friends.
-Doc
Posted Using LeoFinance Beta
If BTC miners stop selling, the coin price will definitely appreciate and that will be good news for HODLERS. 😄
Posted Using LeoFinance Beta
Very interesting news. :)
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Yea, it's exciting to think about what the implications could be for the price...
I was actually waiting for a correction to get some BTC but might get some now just to get some skin in the game, belatedly I guess.
Posted Using LeoFinance Beta
There will be another 30% correction at some point here, my guess is it will start between $60k-$70k, but it's tough to tell exactly where it will start from. Past patterns (from the 2017 rally) indicate that is the range it may start from.
Yes, but the real problem is determining where it will start. If it runs straight to $100k then even a 30% correction only brings it to $70k, over 20% higher than we are now. I'm not a financial advisor by any means but, as I've told every single person I know, multiple times, get in the game. Just buy some. If you wanna put in $10k, then put in $3k here and average in with the rest. At least then you're not sitting on the sidelines if it runs away from you. Get a piece and then decide when and what you want to do with the rest. Personally, I have an autobuy in to buy $100 every two weeks until it hits $100k. Hopefully it stays below that number long enough for me to get a decent amount.
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Good point. This is exactly what I was thinking of. We were just talking about it and a correction in BTC price is happening now. lol I'm getting in... :)
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Thanks for the tip, man. I will be watching the price closely.
Posted Using LeoFinance Beta
Most definitely a perfect storm,..until it isn't. I love how a liquidity crunch has a positive price impact on many DeFi tokens. Deflationary tokens is where it's at!
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Yep. It's a bummer HIVE and some of the others aren't participating more than they are with all the euphoria out there...
Agreed, at least Leo is moving into the DeFi space, with the LEO token being at the core of the product mix.
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Wow wow wow, the spiral effect of this will be massive, this will likely catch on like a wild fire, what then happens to the value of Bitcoin after it does? Honestly tho, I'm more concerned about alts,...Bitcoin has already won. Like I always say tho, this seasons bull run will be like no other, y'all can throw those historic charts into the bin now
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damn i have completely missed that point....
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Yes, these numbers lead to scary numbers for the price. I have no idea how this bull cycle is going to play out but I'm leaning more and more towards a massive blowoff top, as you say, somewhere considerably north of $200k. Between this and HIVE/LEO, why buy anything else?
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Not to mention are we going to see the non-mining corporate entities selling like we've seen in past consumer runs? I don't think so and feel like this could end up making this the big cycle...
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STOPTo support your work, I also upvoted your post!
Check out the last post from @hivebuzz:
This is not only positive news. It could break the stock-to-flow model of Bitcoin's fair value.
If we see a massive overshoot of BTC's fair value based on publicly traded miners issuing debt to mine bitcoins without having to sell it, the whole market could become incredibly unstable when the sellers become comfortable selling. You could see bankrupt miners everywhere and a total collapse of hash rate. That's not a fun scenario to think about. A difficulty adjustment would then follow, allowing for the miners to recoup some of their losses. But too much instability could lead to a major loss of trust in the network.
But I guess it was inevitable that entities with deep pockets would be interested in bankrolling miners so that they wouldn't have to immediately sell.
Very interesting times. A bubble of epic proportions could be in the making.
Posted Using LeoFinance Beta
Yes this will be the way, and also for a lot of Hodlers. Betting to take a loan against the collateral of your Bitcoin, as certainly in the UK that saves you 20% CGT. Tradfi is over, Defi is here.
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#btc is roaming
around $52k, just a sign
to play in the hands of weak ones. If you buy at
$53k you cannot sell.
If you buy at $20K+ you are thinking hard.
Miners may not see the volatility as an issue.
cause they see another picture.
It should be the same like you mention
less and less btc are hitting the market
creating a gap very soon.
Posted Using LeoFinance Beta
I like this stock, but now might be good time for selling. We’re supposed to buy the bear market and sell the bull. All u do seem to do is sell bull 💩 tho! haha jk 😂 🤙
"When I see a bubble forming, I rush to buy it"
The most money is made during the bubbles, just have to sell before it deflates. There's simply too much money out there from a macro perspective (as well as past trends) for it to be down for long in this environment. Until the FED stops buying $120 billion in treasuries every month, more stimulus keeps coming and interest rates are at zero, bitcoin and the like are going to trend higher.
HIVE!D