Analysis Indicates Bitcoin May Be Undervalued Amid Positive Metrics

Analysis indicates that Bitcoin may be undervalued due to declining exchange reserves and a favourable Bitcoin Stablecoin Supply Ratio. The diminishing USDT dominance hints at a return of risk-on sentiment, potentially leading to bullish trends. The Bitcoin RSI shows signs of recovery, with prices possibly exceeding $100,000 soon.

Recent analysis by CryptoQuant suggests that Bitcoin (BTC) could still be undervalued based on various on-chain metrics. Analyst BorisVest highlights that bullish sentiment remains for this leading cryptocurrency, indicated by two significant on-chain indicators that imply BTC’s price may not reflect its fair value.

The first metric is the substantial decline in Bitcoin’s exchange reserves, currently at approximately 2.43 million BTC, down from 3.40 million BTC during the 2021 bull run. This decrease implies that more BTC is being withdrawn and held long term rather than being sold. A tightened supply could lead to an increase in price due to growing demand.

Additionally, BorisVest mentions the Bitcoin Stablecoin Supply Ratio (SSR), which presently stands at 14.3. This metric indicates that even if BTC’s price decreases further, sufficient purchasing power exists among potential investors to avert a significant price drop. The SSR historically increases with rising BTC prices, which suggests potential overvaluation; however, it has not yet reached the 2021 level of approximately 34, indicating that BTC may currently be undervalued.

Moreover, analyst Titan of Crypto has observed a bearish divergence in USDT dominance on the weekly timeframe, suggesting that investors may be shifting from stablecoins back to risk-prone assets like BTC and altcoins. This pattern reflects an improving market sentiment, which is generally associated with a bullish phase for cryptocurrencies.

Simultaneously, the Bitcoin weekly Relative Strength Index (RSI) has broken its long-standing downward trend, suggesting the possibility of a price recovery. Analysts are optimistic, with some projecting that BTC could exceed $100,000. Current exchange net flow data also indicates that a rally for BTC may be imminent. As of the latest update, BTC is trading at $85,550, reflecting a 0.5% increase in the past 24 hours.