Bitcoin Could be Cheaper Than it Looks According to Fidelity – BeInCrypto

Bitcoin price has halted its free fall, bouncing off the peak of the previous cycle and returning above $22,000 today, but it is undervalued according to Fidelity.

Bitcoin is down by a whopping 26% over the past week, falling to an 18-month low of $20,193 on June 15. It has since regained a bit of competition and is back at $22,344 at the time of writing, but the asset is still depressed, down 67% from its all-time high.

Jurian Timmer, director of global macros at investment giant Fidelity, is looking for a price-earnings ratio (P/E) for bitcoin, which is equivalent to the price/network ratio because it is not a company.

As per the chart, the ratio is back to the same level it was during the 2013 and 2017 cycle peaks. He summarized that “valuation is often more important than price.”

bitcoin valuation

The AP/E ratio is used in traditional finance to value a company by measuring its current share price relative to earnings per share. This does not work for cryptocurrencies, so the price is measured based on network activity. A similar way of looking at it is the network value to transaction ratio (NVT), as represented by technical analyst Willy Woo.

Another way to highlight this, Timmer said, is to overlay bitcoin’s non-zero address against its price. “The price is now below the network curve,” he observed. Using Glassnode’s bitcoin dormancy flow model, they then showed how high the asset was at the moment. Bitcoin has not sold so much since the capitulation events in 2011, 2014 and 2018.

This could be a sign that we are very near the bottom of this market cycle and this week’s heavy selling could be the final flush-out.

final miner surrender

There is one additional factor that could have led to the fall in the last leg, similar to the 2018 market crash – bitcoin miners.

Miners are moving BTC to exchanges this week at record levels. coin metrics informed of There was an all-time high in dollar terms with a net $1.94 billion worth of BTC sent to exchanges yesterday. This is equivalent to a record 88,000 coins in just one day.

Miners need to offload assets to cover their rising electricity expenses and stay in business for the crypto winter. This mass liquidation could lead to another large dump, an echo of the over 80% drop that occurred in previous cycles.

If this happens, the bitcoin price could drop to around $12,000 in real terms, which would mark an 82% pullback from the peak level. Nick Carter, partner at Castle Island Ventures, explained the forces behind this minor liquidation event in a recent tweet.