Bitcoin Remains Severely Undervalued; Can a Halving Cycle Kickstart a New Phase?

PlanB, the founder of the Bitcoin stock-to-flow model, an analytical tool designed to spotlight Bitcoin’s value based on scarcity levels, shared a chart displaying the asset’s market value in comparison to other traditional asset rivals.

According to the data shared by the Bitcoin proponent, Bitcoin appears to be severely undervalued at this time, with its long-standing rival, Gold, outperforming. While Bitcoin’s overall market value sits at $2 trillion, Gold’s market value is a staggering $20 trillion

Highlighting another notable difference in value, PlanB observed that “Bitcoin scarcity (S2F-ratio) is 120 versus gold 60 years.” Anticipating a potential surge in market value, PlanB expressed optimism for the near term. “Let’s see what this halving cycle will bring.” He asserted

Bitcoin halving-expectations and the broader crypto market

The Bitcoin halving event occurs once every four years and cuts circulating Bitcoins by 50%. It was last observed on April 20th, 2024, with block rewards reduced to 3.125 BTC.

Post-Bitcoin halving expectations are usually bullish, as historical data displays a massive price value increase in long- and short-term cases. In 2016, Bitcoin soared by more than 271% in price value after halving.

In 2020, the asset recorded the highest post-halving price rally, with gains increasing more than 234%. Bitcoin has since recorded a 36% increase from last year’s $63,825 pre-halving price in April. However, it is important to see how macro factors affect price in the long term.

At the time of this report, Bitcoin is trading at a press time price of $87,361. The asset remains in a critical position, as long liquidated positions hit $400 million. According to market analyst Amr Taha, BTC holding above the short-term realized price could signal a rise in demand. On the flip side, a breakdown below these levels suggests a potential reversal.