BitcoinBTCOn Monday the price dropped to its lowest level in a full year, $74,555. This represents a drop of 40% from all-time. This move coincided Bitcoin ETPs have seen a $1.3 Billion net withdrawal from their global markets.
Analysts may be able to see the potential for an asymmetrical trading setup in this drawdown, which coincided with the extreme negative sentiment and the low valuation metrics.
The key take-aways
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Bitcoin’s two-year rolling MVRV Z-score fell to its lowest ever level, signaling extreme undervaluation.
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Weekly net outflows of global Bitcoin ETPs totaled $1.35 Billion, with $1.49Billion coming from US-based spot exchange traded funds.
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Bitcoin’s daily RSI fell into the range of 20 to 25, a zone which has always preceded a 10% rebound since August 2023.
“Fire-sale” Bitcoin valuations are rising as Bitcoin sentiment falls: Bitwise
Weekly Crypto Market Compass report by Bitwise, BTC’s dip has driven its two-year rolling Market-Value-to-Realized-Value (MVRV) z-score to the lowest level ever recorded, a metric linked with undervaluation, “signalling fire-sale valuations for Bitcoin”.
The MVRV Z-score is a measure of how much Bitcoin’s value has deviated from its aggregate cost base, after adjusting for historic volatility.
Bitwise’s Cryptoasset Sentiment Index has also fallen to levels seen last during October 2023, when liquidation crashed. Only 2 out of 15 indicators tracked remain above their short term trend.
Capital flows reaffirmed the tone of bearishness. Net outflows from global crypto ETPs totaled $1.73 billion last week. This follows $1.81 billion in the prior week. Only Bitcoin products generated $1.35 billion. Most of this was driven by US BTC spot ETFs.
Grayscale Bitcoin Trust (iShares Bitcoin Trust) and Grayscale Bitcoin Trust ($119 million) both posted weekly outflows of $119 and $947 millions, respectively.
Related: Bitcoin bull market ‘confirmed over?’ BTC price sees 4th red monthly candle
Bitcoin’s support may be found near the Monday lows
Bitcoin could be in a position for a temporary relief after it established a low local price near $74,500 Monday. Since August 2023 the daily relative strength (RSI), which measures the price’s ability to recover, has dropped between 20 and 25.
The data on the lower time frames supports a possible rebound. Also, Binance and Coinbase’s spot cumulative volume (CVD), which measures the change in the total amount of BTC traded at 79.300 dollars per coin has changed to a positive value.
As the spot CVD rises, it indicates net aggressive purchases. The flat open rate and the negative aggregated funding rate suggest that spot demand is driving the trend, rather than leveraged longers. This reduces immediate liquidation risks.
BTC long liquidations This view is supported by the fact that the market has seen a recent increase in value of over $1.8 billion, while the liquidity currently on the rise comes from the over $3 billion worth of cumulative short positions, which are at risk for liquidation around $85,000.
Crypto trader ‘exitpump’ echoed This setup is characterized by a divergence between major exchanges in the spot CVD.
Related: Trump’s Fed nomination a ‘mixed’ signal for Bitcoin, US liquidity: Analyst
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Source: cointelegraph.com
