Jurrien Timmer, director of macroeconomic analysis at influential asset manager Fidelity, concludes that Bitcoin (BTC) is clearly “too cheap” right now.
As the financial expert explains on Twitter, the current Bitcoin crash is also accompanied by a decline in the so-called “price-to-network ratio”, which is now as low as it was in late 2013 and 2017. According to Timmer. this is a possible sign that the market-leading cryptocurrency is currently undervalued.
Is BTC cheaper than it looks? If we consider a simple “P / E” metric for BTC as the price / network ratio, then this ratio is back to the 2017 and 2013 levels, although BTC itself is only back to the end of the 2020 levels. Valuation is often more important than price. /THREAD pic.twitter.com/6XMPrtRUzF
– Jurrien Timmer (@TimmerFidelity) June 15, 2022
Bitcoin is undervalued
The price-to-network ratio is a change in the price-to-earnings ratio (PER) or business relationship, which in German is known as the price-earnings ratio (KGV). This indicator can usually be used to determine if a stock is overvalued or undervalued.
Similarly, while a high P / E indicates that an asset is overvalued, a low P / E indicates that an asset is undervalued. The “true” market value of Bitcoin can be read from the price-network ratio, which is currently well above market value or not accurately reflected by its low level.
Expert Timmer confirms this reading based on the demand curve of the crypto market leader that he derives from the comparison between non-zero addresses (i.e. BTC wallets with assets> 0) and market value. Therefore, the demand or number of wallets asking is currently higher than the “market value”, which in turn suggests that the Bitcoin price is far too depressed.
Bitcoin is oversold
Finally, the knowledgeable analyst emphasizes his assessment using the hibernation indicator provided by the Swiss cryptocurrency market research institute Glassnode, which in turn shows that Bitcoin is “oversold”.
The hibernation flow is a highly cited indicator to derive the market value of Bitcoin by relating price and buying behavior.
According to Glassnode, low hibernation indicates that long-term investors have high faith in the price going forward, which is reflected in the fact that they are buying more Bitcoin up from short-term investors. That is why Timmer says:
“Glassnode’s sleep flow is currently at its lowest level since 2011.”
Timmer’s analysis is also indirectly backed by crypto-influencer Anthony Pompliano, who in a speech to Fox Business notes that “Market value and market value [von Bitcoin] breaking up at the moment. ”As a result,“ the weak investors are selling to the strong investors ”.
“What we’re seeing right now is that the weak investors with short-term investment intentions are selling to the long-term, strong investors.”
This “weakness” can certainly be seen in the market, because as the mood barometer Bitcoin Fear and Greed Index shows, the crypto market is currently in the “Extreme Fear” state and at the same time at the lowest point value since Q3 2019 Previously, low Fear Barometer readings often indicate a buy BTC.
For the sake of completeness, it should be noted that Fidelity Investments and senior analyst Timmer certainly have a vested interest in Bitcoin going high. For example, asset management has recently been pushing hard for the market-leading cryptocurrency to also be approved for pension savings, which would of course play into the hands of the investment company. It is therefore not surprising that the expert had already talked about a buying opportunity in May. However, it has been recognized with a drastic drop in prices in recent weeks.
I joined Fox Business to discuss bitcoin and the macro environment.
Value and price are divergent. Weak hands sell to strong hands. We’ve been here before.
– Pomp (@APompliano) June 13, 2022
Subscribe to our social media so you do not miss anything: Twitter and Telegram – Current news, analyzes, expert opinions and interviews focusing on the DACH region.