Non-crypto factors continue to influence BTC’s price, but a key metric on the network dubbed a previous market bottom suggests Bitcoin is severely undervalued.
Bitcoin (BTC) price remains below $22,000 as the market continues to feel the lingering impact of the August 19 sell-off at $25,200.
According to analysts at network monitoring resource Glassnode, BTC’s surge to $25,000 was followed by a “distribution” as profit-taking participants and short-term holders sold when the price hit trendline resistance after a 23-day uptrend, causing BTC to rise above the strike price ( $21,700) traded.
The total inflow and outflow of bitcoins to all exchanges (in USD). Source: Glass Node
The company also noted that the “total inflows and outflows to all exchanges” metric shows exchange flows at multi-year lows and returning to “end-2020 levels,” reflecting “a general lack of speculative interest.”
From a higher timeframe perspective, Bitcoin’s current price action is simply a continuation of its nearly three-month decline in the $18,500-$22,000 range, but the real damper on sentiment is the ongoing concerns in the non-cryptocurrency United States. and the world economy.
The Jackson Hole Economic Symposium begins August 25, where the public will learn more about the Fed’s view of the US economy, its plans for future rate hikes, whether the inflation target will remain at 2% and whether the Fed is considering it. The US and the global economy are in recession. Anticipation for the symposium has clearly made investors nervous, and those shattered nerves are visible in the S&P 500, DJI, and crypto markets this week.
According to Sergey Zhdanov, CEO of cryptocurrency exchange EXMO:
“There doesn’t seem to be a single factor behind the recent decline. Global crises continue and it is not clear where the bottom is. Inflation is forcing people to sell their investments for cash to cover daily expenses. Total credit card debt is breaking new records in many countries. The latest data shows that Covid has not gone away and geopolitical tensions continue to fuel the decline in global markets.”
Aether marches to the beat of its own drum
On the other hand, Ethereum (ETH) seems to be showing some upside potential in terms of technical analysis. Last week, the asset corrected along with BTC and suffered multiple hits related to centralization fears after Tornado Cash was sanctioned by the Office of Foreign Assets Control (OFAC) and the crypto community grew suspicious of the potential outcomes of the move to proof-of-stakes . the network (and its largest ETH participants) are subject to censorship and regulation.
Daily ETH/USDT chart. Source: Trade View
In general, the bullish “fusions” narrative remains strong, and the large cup and grip seen on Ether’s daily timeframe and bounce off the $1,500 level are enough to fuel traders’ dreams of to support a surge in ETH in the $2,500-$2,900 range.
Ether is looking just as attractive in its ETH/BTC pair, which bounced off support near the 0.073 BTC area.
MVRV on-chain data points to Bitcoin undervaluation
As @big_smokey1 mentioned that “stocks and cryptocurrencies are clearly not at risk” with the Jackson Hole looming, and in terms of price action, this will likely show up as sustained resistance on bitcoin’s long-term downtrend line until there is enough catalyst to provoke one turnaround. appears.
Related: What Derailed the Crypto Rally? Find out now in the market report
Currently, Bitcoin’s near-term price prospects are far from optimistic, but regular Jarvis Labs analyst “JJ” has spotted a key metric on the network that suggests BTC is trading in a multi-generational buy zone.
Difference between price and MVRV for BTC. Source: Jarvis Labs.
According to JJ, Bitcoin’s MVRV (Market Capitalization vs. Realized Capitalization) indicator shows an “extremely low value.”
Does this mean that investors should go out and invest every last penny in BTC? Probably not, but as the MVRV chart above shows, averaging BTC’s dollar value when its on-chain and technical performance hits extreme lows has proven to be a profitable strategy in the last three bull markets.
The views and opinions expressed here are solely those of the author and are not unbiased