Bitcoin continued to fluctuate heavily on Wednesday, falling to lows near $20,000 before bouncing above $21K, amid broader market reaction to US Federal Reserve’s 0.75% rate hike.
There have also been gains for Ethereum and other cryptocurrencies. Overall, however, the crypto market remains in a downtrend and further price weakness is likely.
Fidelity’s Jurrien Timmer on BTC price
Jurrien Timmer, the Director of Global Macro at Fidelity Investments, says BTC may actually be undervalued at the moment.
Basing his claim on on-chain metrics, the analyst opined:
“Is BTC cheaper than it looks? If we consider a simple “P/E” metric for BTC to be the price/network ratio, then that ratio is back to 2017 and 2013 levels, even though BTC itself is only back to late 2020 levels. Valuation often is more important than price.”
In the stock market, analysts use the price-to-earnings (P/E) ratio – for Bitcoin, it’s the price-to-network ratio – to gauge the market value of a stock. A high ratio often suggests the asset is overvalued, while a lower value indicates an undervalued asset.
The chart below shows this is the case for Bitcoin.
The Dormant Stream of Bitcoin
The third on-chain metric examined by Fidelity’s macro analyst is dormancy flow. For Bitcoin, this is a metric that simply looks at how long coins held on-chain stay still. This is a good indicator to know if the coin is oversold or not.
The Dormant Stream of Bitcoin
The third on-chain metric the Fidelity macro analyst looked at is the dormancy flow. For Bitcoin, this is a metric that simply looks at how long coins held on-chain remain unmoved. It’s a good indicator of whether the coin is oversold or not.
Bitcoin was trading around $21,800 on Wednesday evening, about 30% down in the past 24 hours. The benchmark cryptocurrency’s price is 68.8% off its all-time high of $69K reached in 2021.
