Bitcoin Deep Discounts as ETF Withdrawals Rise: Insights from Bitwise
Recent capital flight from Bitcoin has prompted significant price drops, suggesting a possible market turnaround.
Bitcoin has recently indicated a significant discount after an increase in capital outflows, following a steep fall below $75,000. Historical data suggests a possible 10% rebound in the near future.
Market Update
Bitcoin (BTC) dropped to a year-low of $74,555 on Monday, representing a 40% decline from its previous all-time high. This drop correlated with $1.3 billion in net outflows from global Bitcoin exchange-traded products (ETPs) last week. This situation reflects a largely bearish sentiment and suggests low valuation metrics, yet analysts anticipate a potential opportunity for a significant trade setup.
Key Insights:
- The MVRV z-score, which tracks Bitcoin’s 2-year rolling average, has reached an unprecedented low, indicating extreme undervaluation.
- The ETPs saw $1.35 billion in net outflows, primarily from US-based spot ETFs.
- Bitcoin’s daily RSI fell to the 20 to 25 range, a period historically linked with 10% price rebounds post-August 2023.
Bitcoin Global ETP Netflows
Bitcoin Global ETP netflows. Source: Bitwise
“Fire-sale” Valuations for Bitcoin Amid Collapsing Sentiment
As per Bitwise’s Weekly Crypto Market Compass, the fall in Bitcoin value has driven its MVRV z-score to record lows, indicating a fire-sale environment.
Bitcoin MVRV 2-Year Rolling Z-Score
Bitcoin MVRV 2-year rolling z-score. Source: Bitwise
The MVRV z-score measures the deviation of Bitcoin’s market value from the total cost basis of investors, factoring in historical volatility.
Support Levels for Bitcoin
Bitcoin is seen to potentially recover after hitting a local low around $74,500. Should the market sentiment improve, we might witness a rebound, given that the spot cumulative volume delta (CVD) has begun to lean in favor of net aggressive buying.
Bitcoin Price and RSI Correlation
Bitcoin price and RSI correlation. Source: Cointelegraph/TradingView
Overall, this information serves as a cautionary note. There are real risks involved in trading and investment activities. It’s imperative to conduct thorough research before making investment decisions.
