Bitcoin recent price momentum which led to a renewal of its all-time high (ATH) appears to have reignited interest in key metrics used to time market entries and exits.
Among these, the Stock-to-Flow (S2F) reversion metric has been highlighted by a CryptoQuant analyst known as Darkfost, who shared insights on its current implications for Bitcoin investors.
The metric, a measure of Bitcoin’s price deviations from its expected value based on the S2F model, has become an important tool for many traders assessing market sentiment and identifying potential profit-taking windows.
Darkfost’s analysis points to September 11 as a significant date, when the S2F reversion metric dropped below 1, signaling a potential buy opportunity as Bitcoin traded at $57,000.
Now, the analyst emphasizes a different critical threshold—a value above 2.5—historically indicating a favorable time to secure moderate profits. Should the metric reach a value above 3, it often signals market overheating, marking an opportune moment for larger profit-taking strategies.
The S2F reversion metric offers a structured approach to assessing Bitcoin’s price cycles. Darkfost suggests a two-step profit strategy: investors should consider securing smaller gains when the metric hits 2.5 and proceed to larger profit-taking if it surpasses 3.
Darfost particularly wrote:
A prudent strategy when using this indicator is to take moderate profits once the S2F reversion ratio hits 2.5 and to secure larger profits when the ratio exceeds 3, thereby balancing risk and reward effectively.
Regardless of the suggested indicator by Darkfost on when to take profit, Bitcoin appears not to be slowing down in its upward momentum. So far, BTC has created a new ATH after trading as high as $106,352 in the early hours of Monday.
Although at the time of writing, the asset has seen a slight rebound currently trading at a a price of $105,942, however, BTC is still up by over 3% in the past day more than 10% in the past two weeks.
Unsurprisingly, along with the rising price, BTC’s market capitalization has also seen a significant surge in its valuation now sitting at roughly over $2 trillion as of today. Meanwhile, despite this positive momentum, BTC’s daily trading volume has seen quite an opposite trend.
Particularly, this metric instead of seeing a rise amid the new ATH of BTC, has remain stable and lower than last week’s daily trading volume. At the time of writing, BTC’s trading volume sits at $97.4 billion, a significant decline from the over $140 billion volume valuation seen last week on December 10.
Featured image created with DALL-E, Chart from TradingView
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