Bitcoin Undervaluation Surges as ETF Outflows Intensify: Bitwise Report

Bitcoin Faces Record Undervaluation Amid ETF Outflows

Bitcoin's (BTC) price declined to a year-to-date low of $74,555, reflecting a 40% drop from its peak, coinciding with $1.3 billion in net outflows from Bitcoin exchange-traded products (ETPs). Analysts suggest a potential asymmetric trade setup may emerge despite the bearish sentiment.

Key Insights

• Undervaluation Signal: Bitcoin's 2-year rolling MVRV z-score has hit an all-time low, indicating significant undervaluation.
• ETF Outflows: Global Bitcoin ETPs recorded $1.35 billion in weekly outflows, primarily driven by $1.49 billion from US spot ETFs.
• RSI Analysis: Bitcoin's daily RSI entered the 20 to 25 range, historically leading to 10% rebounds since August 2023.

Valuation Concerns Amidst Bearish Sentiment

According to Bitwise's Weekly Crypto Market Compass, Bitcoin's dip has pushed its MVRV z-score to unprecedented lows, indicating "fire-sale" valuations. The MVRV z-score evaluates Bitcoin's market value against the cost basis of investors, adjusted for historical volatility.

Bitwise's Cryptoasset Sentiment Index also dropped to levels reminiscent of the October 2023 crash, with only 2 of 15 indicators above their short-term trend. Global crypto ETPs saw $1.73 billion in outflows, with Bitcoin products accounting for $1.35 billion, driven mainly by US spot BTC ETFs.

Potential for Short-Term Rebound

Bitcoin may be poised for a short-term recovery after establishing a local low near $74,500. The daily RSI's entry into the 20 to 25 range often precedes price rebounds, with the exception of June 2024. The spot cumulative volume delta (CVD) on Binance and Coinbase has turned positive as BTC approaches $79,300, indicating net aggressive buying. Despite flat open interest and negative aggregated funding rates, the move is driven by spot demand rather than leveraged positions, reducing immediate liquidation risks.

BTC long liquidations worth over $1.8 billion last week support this view, with more than $3 billion in cumulative short positions at risk near $85,000. Crypto trader 'exitpump' noted a bullish spot CVD divergence across major exchanges, suggesting a potential upward move.

This article does not constitute investment advice. Conduct your own research before making investment decisions. Codeum is not liable for any losses or damages arising from reliance on this information.