The price of Bitcoin (BTC) fell to a one-year low of $74,555 on Monday, down 40% from its all-time high. Movement coincided last week saw a net outflow of $1.3 billion from global Bitcoin exchange-traded products (ETPs).
This decline coincided with extremely bearish sentiment and low valuation metrics, but a silver lining may be analysts’ view that work is underway on a potential asymmetric trade setup.
Key takeaways:
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Bitcoin’s two-year rolling MVRV z-score has dropped to an all-time low, signaling extreme undervaluation.
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Global Bitcoin ETPs recorded weekly net outflows of $1.35 billion, of which $1.49 billion came from US spot ETFs.
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Bitcoin’s daily RSI has fallen to the 20 to 25 range, a zone that has preceded a 10% bounce in every case since August 2023.
Bitcoin ‘sell-off’ valuations emerge as sentiment collapses: Bitwise
According to the weekly cryptocurrency market compass report According to Bitwise, BTC’s decline has pushed its two-year trailing market-to-realized value (MVRV) z-score to an all-time low, a metric linked to undervaluation “signaling Bitcoin sell-offs.”
The MVRV z-score measures how far Bitcoin’s market value deviates from investors’ total cost basis, adjusted for historical volatility.
Bitwise’s Cryptoasset Sentiment Index also fell to levels last seen during the October 2023 liquidation crash, with only 2 of the 15 tracked indicators remaining above their near-term trend.
Equity fund flows reinforced the bearish tone. Global cryptocurrency ETPs recorded net outflows of $1.73 billion last week, up from $1.81 billion the week before. Bitcoin products alone reached $1.35 billion in value, with most of it coming from US spot BTC ETFs.
Grayscale Bitcoin Trust and iShares Bitcoin Trust recorded $119 million and $947 million in weekly outflows, respectively.
Related: Bitcoin bull run ‘confirmed?’ BTC price sees the fourth red monthly candle
Bitcoin may find support near Monday’s lows
Bitcoin may be headed for a short-term relief move after setting a local low near $74,500 on Monday. The daily Relative Strength Index (RSI) has fallen to the 20 to 25 range, a zone that has preceded around a 10% price recovery in each case since August 2023, with June 2024 being the only lagging exception.
Lower timeframe data supports the possibility of a rebound, with cumulative spot volume delta (CVD) on Binance and Coinbase turning positive as BTC rebounded towards $79,300.
Rising cash CVDs indicate aggressive net buying, while flat open interest and negative aggregate funding rates suggest spot market demand rather than leveraged long positions are behind the move, reducing the immediate risk of liquidation.
BTC long liquidations of over $1.8 billion last week support this view, with current liquidity in positive territory, with accumulated compact positions of over $3 billion at risk of liquidation near $85,000.
Cryptocurrency trader’s “exit pump”. it happened again this setup, noting bullish CVD spot divergence on major exchanges.
Related: Trump Fed Nomination Is a ‘Mixed’ Signal for Bitcoin and US Liquidity: Analyst
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