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According to a CryptoQuant Quicktake post published today, Bitcoin (BTC) may still be undervalued based on several on-chain metrics. Crypto on-chain analyst BorisVest explained that data suggests bullish sentiment remains intact for the leading cryptocurrency.
On-Chain Metrics Suggest Bitcoin Still Undervalued
BorisVest pointed to two key on-chain metrics suggesting that BTC’s current price might be below its fair value. First, the analyst highlighted the decline in Bitcoin’s exchange reserves.
According to recent data, BTC exchange reserves – the amount of BTC available on cryptocurrency exchanges – are currently hovering around 2.43 million BTC, a sharp decline from the 3.40 million BTC on exchanges during the 2021 bull run. The analyst noted:
The Bitcoin exchange reserve data shows that Bitcoin is being withdrawn from exchanges after seven years. The fact that Bitcoin is not readily available for sale suggests it is being held for the long term. A decrease in Bitcoin supply supports a potential price increase.
Source: CryptoQuant
To explain further, a decline in BTC exchange reserves means fewer coins are available for sale on centralized exchanges. This suggests that investors are holding rather than selling – a signal of growing confidence and potential undervaluation, as supply tightens while demand may rise.
Further, BorisVest pointed to the Bitcoin Stablecoin Supply Ratio (SSR), which currently stands at 14.3. This suggests that even if BTC falls further, there is enough purchasing power among potential investors to prevent a major price decline.
The analyst explained that the SSR increases as the BTC price rises, indicating reduced purchasing power, which may signal that BTC is overvalued at prevailing market prices. The following chart shows that the SSR has not yet reached its 2021 levels – around 34 – hinting that BTC may be undervalued at its current price.
Source: CryptoQuant
USDT Dominance Shows Bearish Divergence
Crypto analyst Titan of Crypto shared an interesting observation regarding the declining USDT dominance on the weekly timeframe. The analyst noted that a hidden bearish divergence may be forming, which could indicate an early signal of risk-on sentiment returning to the market.
Source: Titan of Crypto on X
A bearish divergence on the USDT dominance chart suggests that investors are becoming less defensive, possibly rotating out of stablecoins and back into risk-on assets like BTC and altcoins. It often signals improving market sentiment and a potential bullish phase for crypto.
Meanwhile, the Bitcoin weekly Relative Strength Index (RSI) recently broke its prolonged downtrend, sparking hopes for a potential price recovery, with some analysts targeting prices beyond $100,000.
Additionally, exchange net flow data suggests that a BTC rally may be closer than most investors anticipate. At press time, BTC is trading at $85,550, up 0.5% in the last 24 hours.
BTC trades at $85,550 on the daily chart | Source: BTCUSDT on TradingView.com
Featured image created with Unsplash, charts from CryptoQuant, X, and TradingView.com
Ash is a dedicated crypto researcher and blockchain enthusiast with a passion for diving deep into the evolving world of decentralized technologies. With a background in writing and a natural curiosity for how digital assets are shaping the future, he has immersed himself in various sectors of the cryptocurrency space, including decentralized finance (DeFi), NFTs, and liquidity mining. His journey into crypto started with a desire to fully understand the technology behind it, leading him to explore and engage with these systems firsthand.
Ash’s approach to DeFi goes beyond surface-level research as he actively participates in decentralized protocols, testing their functionality to gain a deeper understanding of how they operate. From experimenting with staking mechanisms to exploring liquidity mining strategies, he is hands-on in his exploration, which allows him to provide practical, real-world insights that go far beyond theoretical knowledge. This immersive experience has helped him develop a comprehensive grasp of smart contracts, token governance, and the broader implications of decentralized platforms on the future of finance.
In the NFT space, Ash’s interest is driven by the technology’s potential to reshape ownership and creativity in the digital age. He has explored various NFT projects, gaining insights into how these digital assets function within different ecosystems.
