Bitcoin Reaches S2F Reversion Level of 2.5 Indicating Profit-Taking
Bitcoin has demonstrated strong price performance, achieving new highs consistently over the past week. Investors are evaluating whether to secure profits or maintain a bullish stance for future growth.
A recent analysis by CryptoQuant analyst Darkfost examines current market sentiment and offers insights on strategies for navigating Bitcoin’s cycle.
Time to Secure Profits?
Darkfost's analysis focuses on the S2F reversion metric, which assesses market conditions and identifies moments for buying or selling Bitcoin. The metric has reached 2.5, indicating that the market is "heating up." This does not imply Bitcoin has peaked but suggests that profit-taking may be wise. Darkfost noted:
Currently, the S2F reversion has reached the 2.5 level, which historically suggests that starting to take some profits may be prudent. This doesn’t indicate we’ve reached the cycle’s top, but it means that the market is beginning to heat up but stay bull.
The S2F (Stock-to-Flow) reversion metric derives from Bitcoin’s stock-to-flow model, comparing existing supply with annual production rates. It provides insights into valuation and potential price movements, with higher levels often indicating overbought market conditions.
Darkfost advises that further profit-taking could be considered when the S2F reversion reaches the 3.0 level.
Bitcoin Market Performance
Bitcoin remains in a bullish trend, recently achieving an all-time high (ATH) of $98,310, marking over 160% year-to-date price performance. Currently, BTC trades at $97,236, reflecting a 1.2% decline from its ATH but a 3.1% increase in the last day.
Analysts predict potential further rallies toward the six-figure mark. Prominent crypto analyst Ali highlighted that Bitcoin, breaking out of a bullish flag on lower time frames, could reach $100,000 soon.
#Bitcoin $BTC could reach $100,000 today as it appears to be breaking out of a bull flag on the lower timeframes. pic.twitter.com/UKKcXilHO4
— Ali (@ali_charts) November 21, 2024
Featured image created with DALL-E, Chart from TradingView