Recent developments have resulted in Bitcoin (BTC) regaining its undervalued status. According to CryptoQuant’s on-chain data, this is the case. However, how is Bitcoin in an undervalued region while its price has remained above $20,000?
Despite a decline in weekly performance, Bitcoin maintained its stability between $20.9K and $21.8K. The leading cryptocurrency has traversed these zones in recent days. During the writing of this blog post, Bitcoin’s price hovered just below the $21,000 mark, having dropped approximately 7% in the past week. In addition, CryptoQuant’s analysis of Bitcoin’s condition suggests the asset’s trough may be present or imminent.
Season to Fill?
The cryptocurrency disclosed that Bitcoin’s yearly MVRV (Market Value to Realized Value) remained below 1. As of the time of writing, the metric was near 0.9956. According to the graph, the average Bitcoin holder during the specified time period experienced losses, suggesting that a turnaround may be imminent.
However, it may be premature to draw conclusions from a single metric. The analysis considers a number of indices, including BTC LTH spending during the specified time period. Additionally, CryptoQuant examined supply in profit.
Upon analyzing the data, the analytics firm discovered that Bitcoin’s profit-generating supply fell by 56.44 percent during the week. In the meantime, the LTH spender hovered at 0.5774, representing a 44% decline. The deteriorating metrics led CryptoQuant to conclude that it may be time to purchase Bitcoin.
Earlier reports suggested that institutional demand for Bitcoin increased and whales filled their wallets. Nonetheless, retail investors must exercise caution when interacting with the market.
Bitcoin and Hold
BaroVirtual, an analyst at CryptoQuant, emphasized the need for prudence. He believes that Bitcoin miner activity affects the price of Bitcoin. Thus, their current position may not indicate a bottom or an imminent one. Histories indicate that decreases in miner reserves result in Bitcoin price declines. Moreover, data suggested that market participants may soon forget about upside discussions, as the market is now focused on downsides.
The Relative Strength Index (RSI) could validate BaroVirtual’s position. At the time of publication, this indicator read 39.94. From a contractual standpoint, BTC’s next move may depend on a number of underlying factors. Thus patience is essential cryptocurrency.