Bitcoin (BTC) price has recovered after falling into undervalued territory a week ago. Despite price fluctuations, demand for the asset remains positive.
Weekly report from on-chain analytics platform CryptoQuant shared crypto potato The recent decline in BTC has crushed the unrealized gains of short-term holders to 0%, revealing that the BTC price may have bottomed out.
Bitcoin reaches undervalued territory
On January 23, Bitcoin hit a two-month low of $38,000, making it undervalued in the short term. The undervaluation of BTC was seen as a negative Coinbase premium, as BTC was trading at a lower rate on crypto exchanges.
Another sign of BTC’s undervaluation was the “extremely” low rewards for Bitcoin miners. This may have led to increased selling pressure from miners as they triggered the largest selling wave since May 2023 a few days ago.
In addition, unrealized gains for short-term holders decreased to 0%, and they sold assets at a loss for the first time since October. However, CryptoQuant believes that a price rally could occur soon, as unrealized gains falling to zero will be the criterion for BTC to resume its rise.
Significant profits are expected in the second half of the year
After Bitcoin recovered to the $43,000 level on January 29, buy orders dominated the perpetual futures market as traders closed out short positions as the price rose. This is evidenced by the taker-buy ratio, which has soared above 1 for the first time since early December.
At the time of writing, BTC was hovering around $42,100, but since the first half of a halving has historically been flat to slightly negative for digital assets, CryptoQuant expects the cryptocurrency to see significant growth in the second half of this year. We believe we will record a return.
On the other hand, BTC demand remains positive. Whales continue to accumulate, reaching levels last seen in December 2022. Additionally, outflows from Grayscale exchange-traded funds (ETFs) have eased recently, leading to buying from other products, particularly those from BlackRock and Fidelity. , offset sales.
Notably, the total BTC holdings of nine other spot ETFs have increased to a new level of over 150,000.
Meanwhile, stablecoin liquidity is also good, with Tether (USDT) market capitalization rising to a new high of $96 billion, increasing by $800 million daily on January 22nd.