But, a key indicator is showing that the same trend that precursed Bitcoin’s rally from triple digits to $20,000 has appeared once again.<\/p>\n
Last Time Bitcoin Did This, It Rallied 2,700% In 18 Months<\/h2>\n
As first observed by a trader<\/a>, Bitcoin is now trading below its production cost despite the block reward halving being 25 days out. The last time this trend happened was in 2016, when Bitcoin traded below its production cost into the halving, then rallied 2,700% to $20,000 in the 18 months that followed.<\/p>\n It’s important to note that this indicator is far from the only signal implying that another round of rapid growth for Bitcoin is on the horizon.<\/p>\n A trader with the moniker Theta Seek shared that according to his analysis, using data from Chainalysis, specific BTC miners have been \u201csilently accumulating coins over the past six months.\u201d<\/p>\n Theta expects this trend to continue, saying that they believe miners will \u201ccontinue to do so until well after the halving,\u201d which could result in prices rapidly surmounting the $20,000 all-time high \u201cquickly this year from the supply shock.\u201d<\/a><\/p>\n What’s crazy is that 2,700% could happen again, according to a popular model of Bitcoin’s price.<\/p>\n The model in question is the stock-to-flow model, an econometrics model that suggests Bitcoin\u2019s value is primarily derived from its level of scarcity, defined by the inverse of its inflation rate. The model, which has been backtested to have an R squared value of 95 percent (extremely accurate), suggests Bitcoin will have a fair value of $55,000 to $100,000 after May\u2019s block reward<\/span>\u00a0halving<\/span>.<\/p>\n Per the creator of the model, an analyst named PlanB, BTC has historically overshot the fair value readings during full-blown bull markets, suggesting the same could happen again.<\/p>\n Notably, the past few days have seen many call the legitimacy of the model into question.<\/p>\n Hugo Nguyen, a crypto writer and a 2019 resident at Bitcoin development firm Chaincode Labs, recently explained<\/a> that he thinks the model is \u00a0predicated on \u201c2 pathetic data points,\u201d referencing the fact that there have only been two prior halvings, and a \u201cgenerous margin of error.\u201d<\/p>\n He added that \u201canyone using the ridiculous S2F price model and consider flow to be effectively non-zero is just silly,\u201d adding that halvings in the future will be \u201canticlimatic and increasingly a historical relic.\u201d<\/p>\n I maybe over my head, but let me say this.<\/p>\n Bitcoiners who popularize S2F price model no longer evangelize Bitcoin based on its technical merits, but a lazy and irresponsible way to cause FOMO. That\u2019s a cop-out. 1\/ https:\/\/t.co\/JWsHur08te<\/a><\/p>\n — Hugo (@hugomofn) April 13, 2020<\/a><\/p><\/blockquote>\n![](\"https:\/\/i0.wp.com\/pbs.twimg.com\/media\/EVvgyDPWAAcrbhM.jpg?ssl=1\")
<\/p>\nRelated Reading: The 42% Growth of This Crypto\u2019s Market Cap Shows More Upside Is Imminent: Analysis<\/a><\/h6>\n
Key Model Corroborates Bullish Narrative<\/h2>\n
Related Reading: Could Goldman Sachs\u2019 Cheery S&P 500 Projections Boost Bitcoin Higher?<\/a><\/h6>\n
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