As the price of Bitcoin crosses historic highs, and yesterday Friday November 8, 2024 came close to $77,000, investors find themselves facing a crucial question: is this rapid rise supported by real value, or is the market reaching Does it already have its limits? In a price discovery phase, where traditional benchmarks seem to be dissolving, analyzes of on-chain metrics make it possible to better understand the underlying potential of the most emblematic crypto. Five key indicators show that, despite this spike, Bitcoin remains fundamentally undervalued.
Indicators which confirm a significant margin of progress
The first indication that Bitcoin could still have room to rise comes from the so-called “Rainbow Chart”. According to Lookonchain, this analysis is based on a logarithmic curve that projects future crypto trends. “Bitcoin remains in a moderate valuation phase”, noted Lookonchain in its recent analyses. This metric, updated in the Rainbow2023 model, reveals that Bitcoin remains well below its peak projections, which suggests a potential for progress for investors with a long-term vision.
Another notable indicator is the Relative Strength Index (RSI), currently at 70.83. This index assesses whether an asset is in the overbought or underbought zone. For Bitcoin, an RSI around 70.83 shows that, despite its rise, the crypto has not yet reached a level of overheating that would typically characterize a market peak. This data encourages holders to consider long-term positions, supported by apparent market stability.
Analyzes that reinforce Bitcoin’s bullish trend
Other metrics complement this analysis, with the “Cumulative Value Days Destroyed” (CVDD) which also signals a possible undervaluation of Bitcoin. This model relies on the cumulative value of transactions destroyed over time, an approach that helps identify periods of undervaluation through holding period analysis. Currently, Bitcoin is below the orange CVDD line, a threshold historically associated with buying opportunities. “Investors should pay attention to undervalued areas,” says Looknode, and underlines the relevance of this data for them.
Additionally, the two-year moving average multiplier (2-Year MA Multiplier) reinforces this optimistic view. This model places Bitcoin between red and green trendlines, a positioning that historically leaves room for improvement before the market begins to reach its limits. As long as Bitcoin does not reach the red line, the upside potential remains intact according to this model, which offers investors an additional argument to consider a gradual rise in prices in the coming weeks.
As enthusiasm around Bitcoin continues to grow, these indicators reveal a favorable outlook, but also call for caution. Volatility remains a fundamental characteristic of this market, and the impact of FOMO (fear of missing out) or FUD (fear, uncertainty, and doubt) could lead to abrupt adjustments. While long-term analyzes are promising, caution is required, particularly in a context where collective euphoria can quickly change course.
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