Bitcoin posts third monthly red candle with Stock-to-Flow price model echoing early 2019

Bitcoin (BTC) closed its third red monthly candle in a row this week as a popular analyst likened BTC price action to January 2019.

In a tweet on July 1, PlanB said that BTC/USD is now the furthest away from his stock-to-flow model's estimates in over two years.

Stock-to-flow "make or break"

After May's huge capitulation event, Bitcoin price action has failed to regain lost ground, staying around 50% below recent all-time highs.

As a result, price models are getting a serious test — even as on-chain indicators are beginning to flash bullish again.

In the case of stock-to-flow, which calls for an average price of at least $100,000 this halving cycle, the situation is getting precarious.

Famous for its accuracy, the model has accounted for every twist and turn in BTC price action since its inception. Now, however, the spot price is nearing the limits of what it can accommodate.

"Even for me it is always a bit uneasy when bitcoin price is at the lower bound of the stock-to-flow model," PlanB admitted last week.

Nonetheless, given the changes that can occur in Bitcoin in a matter of months, there is little cause for concern about stock-to-flow becoming invalidated.

"June closing price $35,037 .. as far below S2F model as in Jan 2019," PlanB added on Thursday, implying that it is still "business as usual" for the model's relationship with price.

Next 6 months will be make or break for S2F (again)."

Last time Bitcoin was so far from stock-to-flow, which predicts a price of $77,760 for Thursday, BTC/USD had just emerged from the pit of the 2018 bear market, during which it dropped to just $3,100.

A correction waiting in the wings?

As Cointelegraph reported, price playing "catch-up" with on-chain indicators has become something of a defining narrative in recent weeks.

Related: Coincidence? Bitcoin saw its highs and lows on 'Turnaround Tuesdays' in June

Yardsticks such as the popular Puell Multiple are hinting that a price bottom is on the cards, in line with historical precedent, with an implied bounce to follow.

looks like still tracking -25% #bitcoin difficulty adjust for friday. https://t.co/TuqYAFU1wU bitcoin unaffected, tick-tock next block. mining profitability pic.twitter.com/yONPd88xJq

— Adam Back (@adam3us) June 29, 2021

The ongoing relocation of mining power away from China should also become less of a concern once complete. The mining difficulty is set for its biggest-ever decline this weekend as a result of the upheaval, something which will rapidly increase profits for miners and attract some new mining power.