Bitcoin is approaching one of the most significant turning points in recent years. The popular valuation tool BTC Yardstick recorded a value of -1.6 standard deviations below the long-term average. Such indicators suggest a deep undervaluation of the first cryptocurrency. Comparable values were last observed during the lows of the bear market in 2022.
Historically, this level has always coincided with the formation of a global bottom in 2011, 2017, 2020, and 2022. Therefore, current data may indicate the completion of the correction period and preparation for a new growth phase.
Analysis of the fundamental value of the asset
The Yardstick indicator compares the market capitalization of Bitcoin with the computing power required to secure the network. This calculation includes costs for mining equipment and operational expenses.
"BTC Yardstick at -1.6σ means that Bitcoin is extremely undervalued. Other similar cases: the minimum of 2022, the fall due to the pandemic in 2020, the base before the rise in 2017, and the bottom in 2011. All these episodes were accompanied by active accumulation and completion of the falling phase," noted analyst Gert van Lagen.
The signal of the asset's undervaluation is accompanied by unprecedented activity from large market participants. Over the last 30 days, large investors have purchased 269 822 bitcoins worth about $23.3 billion. According to analytical platform Glassnode, this is the largest monthly purchase volume since 2011.
"This is the largest accumulation in 13 years. The four-year cycle is complete, the supercycle phase has begun," notes crypto analyst Kyle Chesse.
The main volume of purchases came from wallets with a balance of 100 to 1,000 bitcoins. Thus, both wealthy individuals and institutional structures are preparing for the market recovery.
Market psychology after a local correction
Despite active purchases and fundamental undervaluation, the asset's price this year faced pressure. Bloomberg expert Eric Balchunas notes that recent losses appear insignificant against the backdrop of prior growth.
The launch of spot Bitcoin ETFs at the beginning of 2024 contributed to the renewal of historical highs around $69,000 in March. In 2023, the asset's yield was 155.42%, and in 2024 it is projected to be 121.05%. The current decrease of 7% since the beginning of the year is viewed by experts as a natural correction after a period of exceptional profitability.
Many analysts believe that market rallies begin not in moments of universal optimism, but in periods of investor fatigue.
"We are no longer afraid, we are tired. Tired of waiting and believing. However, remember: growth does not begin at the peak of hope. It happens when people are disappointed and ready to give up," wrote analyst Ash Crypto.
The combination of historically low valuation, record buyer activity, and a decline in borrowing volume indicates the proximity of a turning point. Although the exact timing of the start of a new cycle remains uncertain, these indicators create a unique window of opportunity for long-term investors.
