Analysts say Bitcoin is starting to show signs of being undervalued relative to the network's fundamentals, presenting investors with a potential buying opportunity.
Ilya Otichenko, principal analyst at CEX.IO, said active Bitcoin addresses have been rapidly increasing, increasing by 39% in the past week. This shows an increase in demand and liquidity, he said.
Otichenko also noted the sharp decline in Bitcoin's network value-to-Metcalf ratio (NVM). NVM measures the relationship between Bitcoin's market value and activity on its network, indicating potential undervaluation or overvaluation. And currently, Bitcoin's NVM is at levels not seen since all-time highs, suggesting the cryptocurrency may be trading below its intrinsic value.
“Historically, when we see these spikes in active addresses, they often precede or accompany price increases,” Otichenko said. decryption.
He added that the NVM indicator has also been a reliable indicator in the past, such as at the end of 2022 and in September 2023, when the price of BTC recovered after a similar decline in NVM.
Bitcoin is currently trading 0.6% lower at $62,120, struggling to stay above key technical indicators. It is still caught between the 200-day simple moving average (SMA) and the 50-day SMA, a situation that reflects the price trend from October 2023. For the cryptocurrency to break out of this consolidation, it will need to rise above the 200-day SMA. Higher trading volume is essential.
“Bitcoin needs to break above and sustain above the 200-day SMA to gain further upward momentum,” Otichenko said. However, the rally over the past week has been accompanied by a decline in volume, suggesting a lack of strong bullish momentum.
On a broader level, analysts like Brian Dixon, CEO of OTC Capital, are reconsidering Bitcoin's traditional characteristics as a pure risk-on asset.
“Recent analysis, including from large financial institutions like BlackRock, casts doubt on the view that Bitcoin is just a risk asset,” Dixon said. decryption. He highlighted the evolving narrative that BTC behaves similar to gold during economic downturns and pointed to BTC's potential role as a risk-differentiating and even risk-off asset.
This change could redefine Bitcoin's place in investment portfolios, making it a more attractive option for long-term diversification. “Bitcoin has the potential to provide protection against market volatility in a way that traditional assets cannot,” Dixon added, furthering his case for Bitcoin adoption as a hedge against traditional market downturns. I strengthened it.
When it comes to institutional flows, Bitcoin ETFs have had mixed results.
On Tuesday, total net outflows from Bitcoin Spot ETFs reached $18.6 million, with Fidelity Bitcoin ETF (FBTC) leading the way with $48.8 million in outflows. However, the BlackRock ETF (IBIT) saw inflows of $39.5 million on the same day.
Spot ETFs tracking the relatively stable Ethereum recorded a total of $8.1 million in net outflows from spot ETFs on October 8, according to data from SoSo Value.
At the time of writing, Bitcoin price BTC is trading down 0.6% at $62,050, while Ether is trading flat at $2,432, according to data from CoinGecko.
BTC's near-term price movement will continue to depend on upcoming macroeconomic data.
Alex Kuptsikevich, Senior Market Analyst at FxPro, had this to say about the Federal Reserve minutes and the upcoming Consumer Price Index:
(CPI) inflation data could trigger Bitcoin's next move. “A potential trigger for a break out of this range could be Fed minutes or US inflation data if it leads to a reassessment of traditional market expectations,” Kupczykevich said. decryption.
Edited by Stacey Elliott.
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