Bitcoin (BTC) Falling, Undervalued or Continuing Weakness?

Bitcoin (BTC) has been stagnating since last week. It is holding just around $26,000 and investors are confused about its next direction. While some on-chain indicators suggest undervaluation, the charts instead point to persistent weakness.

In short

  • Bitcoin (BTC) NVM Ratio Drops, Suggesting Undervaluation
  • Price Drop Below $25,300 Could Trigger Stop-Loss Orders From Traders

Falling bitcoin (BTC) NVM ratio

Recently, the bitcoin (BTC) NVM ratio dropped below the 0.6 threshold. This usually means the cryptocurrency is undervalued. Indeed, the NVM ratio is a measure used in the markets. It examines the correlation between the market value of a crypto and the number of daily active users.

A high NVM ratio indicates bitcoin is overvalued, while a low ratio suggests undervaluation. As for the current downtrend in the ratio, it implies potential for price upside. However, the major crypto continues to show signs of weakness on a technical level. The SuperTrend indicator issued sell signals, suggesting a deeper price correction.

To confirm any bullish reversal, the price of BTC must close above the $29,500 level. If it fails to recover above this level, a bigger correction could be considered.

Is it the right time to buy?

On the chart, the price of BTC is currently trading in a consolidation range. It fluctuates between $25,300 and $26,800. If the price drops below $25,300, it could trigger stop-loss orders for several traders. A scenario that could lead to a decline towards the critical support level of $24,700.

Meanwhile, Dogecoin (DOGE) co-creator Billy Markus (Shibetoshi Nakamoto) has evoked the best time to buy bitcoin (BTC). He said that the ideal time to invest in BTC was in 2009 or 2010. Although innocuous, this statement did not fail to make supporters of the mother of cryptos react.

Overall, the on-chain indicators suggest bitcoin (BTC) is undervalued. However, the charts point to continued weakness and an upcoming correction. Investors should be careful about taking long bitcoin positions in the short term.

Receive a digest of news in the world of cryptocurrencies by subscribing to our new service of newsletter daily and weekly so you don’t miss any of the essential Tremplin.io!

Similar Posts