Where are we in the broader 4-year cycle? #6

According to the halving tracker from buybitcoinworldwide.com, which takes the number of blocks until the halving multiplied by Bitcoin estimated 10 minute block time, the upcoming Bitcoin halving now sits at roughly 225 days out, which marks a pivotal moment for Bitcoin from a scarcity standpoint, as its stock to flow ratio will surpass that of gold.

Past performance is not an indication of future results.

One valuation methodology that we have not yet discussed is the Puell Multiple. Created by Ark Invest’s head on-chain analyst David Puell, this metric compares the daily USD value of Bitcoin’s supply issuance relative to its trailing 365-day moving averages. This represents how much revenue Bitcoin miners are bringing in relative to how much they’ve brought in over the last year. During the depths of bear markets values of the Puell Multiple undergo sharp declines, which represent miner capitulations and are highlighted with the green box in the chart below. Currently Bitcoin sits around the mid-point of valuation based on this metric.

Past performance is not an indication of future results.

Bitcoin’s Mayer Multiple paints a similar picture, which shows Bitcoin’s price relative to its 200-day moving average. This is one of the older valuation models applied to Bitcoin, created by Bitcoin OG Trace Mayer. Similar to the Puell Multiple, the Mayer Multiple also shows that Bitcoin currently sits at a mid-point of valuation relative to historical readings.

Past performance is not an indication of future results.

Lastly, we look at MVRV deviation bands, which show pricing bands of standard deviations of the market value to realized value ratio that we’ve mentioned in prior weekly updates. Again, this valuation metric shows a similar picture; far from overheated but still a real possibility of retesting the lower bounds of valuation similar to Q1 2020 at some point prior to the next major bull run for Bitcoin/crypto.

Past performance is not an indication of future results.

We hope you enjoyed this week’s crypto market update and look forward to touching base again next week! Thanks for reading.

Learn more about the Halving.

The material in this blog post was created exclusively for eToro by Reflexivity Research.

This communication is for information and education purposes only and should not be taken as investment advice, a personal recommendation, or an offer of, or solicitation to buy or sell, any financial instruments. This material has been prepared without taking into account any particular recipient’s investment objectives or financial situation, and has not been prepared in accordance with the legal and regulatory requirements to promote independent research. Any references to past or future performance of a financial instrument, index or a packaged investment product are not, and should not be taken as, a reliable indicator of future results. eToro makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication.