Jurrien Timmer, Fidelity’s director of global macro, argued that Bitcoin (BTC) could be “cheaper than it looks”, which on Tuesday underscored evidence that the cryptocurrency could be both undervalued and oversold.
Timmer addressed his 126,000 Twitter followers, explaining that although Bitcoin has fallen back to 2020 levels, its price-to-network ratio has rebounded to 2013 and 2017 levels. which according to him may indicate that it is undervalued.
Is BTC cheaper than it looks? If we consider a simple “P / E” metric for BTC as the price / network ratio, then that ratio is back to 2017 and 2013 levels, even though BTC itself is only back to late 2020 levels. Valuation is often more important than price. /WIRE pic.twitter.com/6XMPrtRUzF
– Jurrien Timmer (@TimmerFidelity) 15 June 2022
bitcoin undervalued
The price-to-network ratio is a crypto-riff on a popular benchmark used by traditional stock market investors, the price-to-earnings (P / E) ratio, which is used to determine whether a stock overvalued or undervalued.
A high ratio may indicate that an asset is overvalued, while a low ratio may indicate an undervalued asset.
Timmer highlighted a chart of Bitcoin’s demand curve that is covered by Bitcoin’s non-zero addresses against its market capitalization, noting that the “price is now sitting below the network curve.”
technically oversold
The macro analyst also shared a chart using Glassnode’s dormancy flow indicator, which he said indicates “how technically oversold Bitcoin is.”
Entity-adjusted dormancy flow is a popular measure of to judge bitcoin value by comparing the price with spending behavior.
According to Glassnode, a low dormancy flow rate may suggest increased conviction of long-term holders – meaning that long-term Bitcoin HODLers are buying up difficult short-term sellers.
“Glassnode’s dormancy flow indicator is now at levels not seen since 2011.”
Morgan Creek Digital co-founder and Youtuber Anthony Pompliano gave a similar view to Fox Business Monday, explaining that Bitcoin’s “value and price differ” and that “weak hands sell to strong hands.”
“What we are currently watching is the transfer of weak, short-term-oriented people with weak hands to the long-term-oriented strong hands.”
Bitcoin’s fear and greed index fell to 7, indicating “Extreme Fear” on Wednesday, which has fallen to its lowest levels since Q3 2019. In the past, low index numbers often suggested a buying opportunity.
Related: Bitcoin price rises to $ 22.5K after Fed 75 basis point hikes aimed at curbing runaway inflation
Fidelity Investments and its analyst Timmer were positive about Bitcoin. The investment giant has been working on the launch of a Bitcoin Retirement Investment Plan, which will allow 401 (k) retirement savings account holders to invest directly in Bitcoin. timer predict it that Bitcoin may soon see a revival.
I joined Fox Business to discuss bitcoin and the macro environment.
Value and price differ. Weak hands sold to strong hands. We’ve been here before.
thank you @LizClaman to have me. pic.twitter.com/1S6TckUguE
– Pomp (@APompliano) 13 June 2022