Bitcoin’s price performance has continued to be flat so far, hitting new highs over the past week. As a result, investors seem to be wondering if now is the time to secure profits or remain bullish on the next phase of the cycle.
A recent analysis by CryptoQuant analyst Darkfost sheds light on this situation and current market sentiment, providing insights into potential strategies for navigating Bitcoin’s current phase of the cycle.
Is it time to secure profits?
Darkfost’s observations focus on the S2F regression indicator, a tool used to gauge market conditions and identify strategic moments to buy and sell Bitcoin.
According to the analyst, the indicator has reached 2.5, a historical indicator that indicates that the market is "heating up." While this does not mean that Bitcoin has reached its cycle peak, it indicates that the asset is entering a phase where profit-taking may be a wise strategy. Darkfost wrote:
Currently, the S2F Reversion has reached the 2.5 level, which historically has indicated that it may be prudent to start taking profits. This does not mean that we have reached the top of the cycle, but it means that the market is starting to heat up, but still remains bullish.
It is worth noting that the S2F (stock-to-flow) regression metric is derived from Bitcoin’s stock-to-flow model, which compares an asset’s existing supply to its annual production rate.
The model has historically provided insights into Bitcoin’s valuation and potential price movements. The S2F regression specifically measures deviations from the model, with higher levels typically indicating an overbought market.
While Bitcoin’s S2F indicator has now reached the 2.5 level, Darkfost noted when to take profits, stating:
The next target for further profit-taking could be when the S2F regression indicator reaches 3.0 levels.
Bitcoin Market Performance
Bitcoin remains in a bullish trend. Earlier today, the asset hit a new all-time high (ATH) of $98,310, bringing its year-to-date price performance to over 160%.
However, at the time of writing, BTC’s price has pulled back slightly from its peak and is trading at $97,236, down 1.2% from its ATH but still up 3.1% over the past day.
Analysts say the asset is ready to rally further towards the six-figure price mark. For example, Ali, one of the prominent crypto analysts in the space, recently highlighted that the asset could reach $100,000 as soon as today as Bitcoin breaks out of a bullish flag on lower time frames.