As volatility becomes the new normal, bitcoin's recent fall is more than just a technical correction. It reflects a sudden disengagement of institutional capital and a questioning of the dynamics of the crypto market. Between ETF panic and rarely observed signals of undervaluation, the crypto leader finds itself at a critical crossroads.
In brief
- Bitcoin recorded a sharp fall, reaching a valuation zone described as “fire sale” by Bitwise.
- The two-year MVRV z-score indicator falls below -1, signaling historical undervaluation of the asset.
- Bitcoin ETFs are experiencing massive outflows, with $1.35 billion withdrawn in a week.
- Bitwise notes a marked decline in market sentiment, equivalent to that of October 2023.
A historically low valuation according to Bitwise
While bitcoin has just spent four months in the red, the Bitwise analysis team in its report of 1er FEBRUARY warns : “we have entered a fire sale type recovery zone”.
This alert is based on the MVRV z-score indicator over two years, a reference tool in on-chain analysis. The latter has now fallen below -1, signaling extreme undervaluation of bitcoin, a threshold rarely crossed outside of major capitulation phases.
Bitwise recalls that these levels have historically marked the low points of a cycle or prolonged accumulation zones.
At the same time, data on institutional capital flows trace a massive withdrawal of products exposed to BTC. The report records cumulative net outflows of $1.35 billion from ETPs, including $1.1 billion in the previous week alone.
These disengagements are accompanied by a collapse in general investor sentiment. Bitwise underlines notably :
- A clear lack of interest in spot Bitcoin ETFs, despite expectations of inflows;
- A particularly marked exit dynamic on American platforms, in particular via Grayscale and large asset managers;
- A Cryptoasset Sentiment Index fallen to levels similar to the October 2023 collapse, synonymous with extreme fear in the market.
The combination of these elements fuels a climate of tension, in which the optimism which surrounded the arrival of spot ETF products seems to have dissipated as quickly as it appeared.
The first technical signals of a possible rebound
Despite this phase of intense stress on valuations, certain market elements reveal a different dynamic in the short term.
Bitcoin's relative strength index (RSI), measured in daily data, has now fallen between 20 and 25. This extreme oversold zone has historically preceded rebounds of more than 10%, in four of the five occurrences since August 2023. Bitwise specifies that this configuration could “open a technical window of turnaround, even temporary, in a structurally weakened market”.
Additionally, cumulative volume data (CVD) on Binance and Coinbase shows a resumption of buying, which could signal emerging support from spot investors. Bitwise emphasizes this point: “these upward pressures seem to come from the spot market rather than the leveraged market, which limits the risks of forced liquidation”.
This setup suggests that position players are not exposed to massive margin calls, thereby reducing the likelihood of another mechanical shock to the bitcoin price.
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