Bitcoin Fundamentals Suggest Cryptocurrency Is Massively Undervalued
August 02 2021 - 03:00PM
NEWSBTC
Bitcoin price action might not reflect it, but the leading
cryptocurrency by market cap could be massively undervalued,
according to a variety of fundamental metrics that focus on coin
issuance. These tools are widely known, but when combined paint a
clear picture that backs up any chance that the top coin by market
cap is actually undervalued at $40,000 per BTC. Speculative Boom
And Bust Cycles And The Impact On Perception Of Value Any asset –
be it stock, currency, commodity, or otherwise – goes through boom
and bust cycles; bull and bear markets. These cycles are more rapid
and take place more frequently in crypto than they do in
traditional market counterparts. The reason is both due to the
always-on 24/7, global crypto market and the speculative nature of
Bitcoin, Ethereum, and other top coins. Even with adoption taking
place, they’re still far from achieving their potential. Related
Reading | Five Bullish Monthly Charts That Suggest Bitcoin Will
Blast Off When speculative assets reach a peak of a bull cycle,
they are typically far more overvalued than they should be, which
causes such an extreme correction back down toward the “mean.”
During bear cycles, speculative assets tend to overcorrect as
things appear worse off than they actually are. Bu this is Bitcoin,
and the leading cryptocurrency by market cap might be undervalued
even though it recently made a bull market “peak.” S2F and the
Puell Multiple point to an undervalued BTC | Source: BLX on
TradingView.com Bitcoin Undervalued According To S2F Model, Puell
Multiple Bitcoin might have collapsed by 50% along with the rest of
the crypto market, but it could be significantly undervalued
currently due to the overcorrection. Bitcoin corrected and it was
characteristically extreme, but due to the ongoing lack of supply
the cryptocurrency is significantly below the normal trajectory
through the stock-to-flow model “bands”. Related Reading | Bitcoin
Trend Strength Indicator Suggests Bull Run Isn’t Yet Over In
addition, the Puell Multiple is bouncing from lows, and during this
cycle has yet to enter the red zone which is standard of any
Bitcoin bull market “top.” The Puell Multiple is calculated
“by dividing the daily issuance value of bitcoins (in USD) by the
365-day moving average of daily issuance value.” The S2F model is
more complex, but both look at how issuance impacts overall supply
and the price per BTC. Combined, the two fundamental tools suggest
that the bull market isn’t finished, and is entering its final
stages. The last leg up in Bitcoin as past cycles have proven, will
be dramatic and entirely driven by FOMO and a distinct lack of
supply. Follow @TonySpilotroBTC on Twitter or via the TonyTradesBTC
Telegram. Content is educational and should not
be considered investment advice. Featured image from
iStockPhoto, Charts from TradingView.com
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