Bitcoin’s Metrics Indicate Bull Market is Undervalued

Bitcoin’s valuation metrics indicate that the bull market still has room to run, despite recent price corrections. According to a report from research firm CryptoQuant, the value held by new Bitcoin holders is currently just over 50% of the total invested in the cryptocurrency. This is lower than in previous market peaks, such as in 2017 and 2021, when new investors held over 90% and 80%, respectively.

This lower percentage of holdings by new investors could be due to a slowdown in retail activity in Bitcoin purchases. Typically, heightened retail activity is a sign of market cycle tops. Since October, retail investors have reduced their holdings by 41,000 BTC, while larger investors have increased their holdings by 130,000 BTC. This shift in ownership suggests a shift in market dynamics, with institutional and larger players driving the accumulation phase.

In November, investors on exchange-traded funds (ETFs) led the purchases of Bitcoin, with weekly inflows reaching a record $3.1 billion. Despite the cryptocurrency’s price reaching a record high of $99,655.50 on November 22, it has since declined to around $91,000, failing to break the $100,000 resistance level. Some analysts believe that Bitcoin may still see a 30% correction before crossing the six-figure milestone.

The CryptoQuant bull-bear market cycle indicator has been in the bull area since early November and has been rising steadily. However, it is still below the overheated bull phase seen in March 2024 when Bitcoin traded above $70,000. From a realized price valuation perspective, Bitcoin’s top price target is currently at $146,000, which has acted as a top in previous cycles. The P&L Index has not reached overvalued levels yet, indicating that the price still has room to increase.

Overall, the data suggests that Bitcoin is still in a bull phase and may have further upside potential. This information provides valuable insights for investors looking to navigate the current market conditions and make informed decisions about their Bitcoin holdings.