Bitcoin’s (BTC) price has rebounded after dropping to an undervalued level last week. According to a weekly report from on-chain analytics platform CryptoQuant, BTC’s price may have reached its bottom point as the recent decline wiped out the unrealized profit margins of short-term holders.
Bitcoin Reaches Undervalued Territory
On January 23, Bitcoin fell to a two-month low of $38,000, indicating a short-term undervaluation. This was evident in the negative Coinbase premium, where the asset was traded at a lower rate on the exchange. Another sign of undervaluation was Bitcoin miners being significantly underpaid, leading to increased selling pressure. Additionally, short-term holders sold their assets at a loss for the first time since October as their unrealized profit margins dropped to zero.
Substantial Returns Expected in H2
After bouncing back to $43,000 on January 29, buy orders have dominated the perpetual futures market as traders close their short positions. The taker buy-sell ratio is also above one for the first time since December. While BTC is currently around $42,100, CryptoQuant predicts substantial returns in the second half of the year as historically, the first half of a halving year is flat or slightly negative for Bitcoin.
Positive Demand and Stablecoin Liquidity
Despite price fluctuations, demand for BTC remains positive. Whales are accumulating more Bitcoin, with holdings reaching levels last seen in December 2022. Outflows from the Grayscale ETF have slowed down, with purchases from other products offsetting sales. The total BTC holdings of nine other spot ETFs have also reached new highs above 150,000. Furthermore, stablecoin liquidity is positive, with Tether’s market cap reaching $96 billion and daily increases of $800 million on January 22.
Hot Take: Bitcoin Rebounds and Positive Outlook Ahead
Bitcoin has made a recovery after reaching an undervalued level, with signs pointing towards a potential price rally. The decline in unrealized profit margins and the accumulation of BTC by whales indicate positive demand. Furthermore, the second half of the year is expected to bring substantial returns for the cryptocurrency. With stablecoin liquidity remaining strong, Bitcoin’s outlook appears optimistic despite short-term fluctuations.
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