Bitcoin is currently experiencing an undervaluation phase, indicated by its 30-day realized supply metric. This metric, which measures the amount of Bitcoin that hasn’t been moved in a certain period, can give insight into market movements. Historically, when the realized supply is low, as it is now, Bitcoin has been considered undervalued, leading to significant market movements such as rebounds or relief rallies.
During past corrections, Bitcoin’s 30-day moving average of realized supply has dipped below the lower dotted line, signaling oversold conditions. This pattern was seen during the COVID-19 crash and post-China mining ban, both of which were followed by rebounds. The current setup is similar, with Bitcoin’s 30-day realized supply bottoming out, signaling that Bitcoin is currently undervalued.
Low liquidity in the market can be seen as a sign of market maturation. When fewer coins are actively traded, it often indicates that more holders, including institutions and long-term investors, are adopting a “HODL” mindset. This reduces the frequency of trades and could pave the way for Bitcoin to be seen more as a store of value or hedge, like gold. However, for a bull run to materialize, buyers need to step in to absorb sell-side pressure from weak hands and establish a market bottom.
Despite Bitcoin maintaining support above the $80k level amid macroeconomic headwinds, a definitive shift into a full-blown bull market has yet to happen. Long-term holders have been liquidating Bitcoin at around $82k, leading to a retracement back to $81k. The lack of retail participation in the market is inhibiting significant price movement towards $90k in the short term. Without a notable shift in market structure or sentiment from retail investors, the likelihood of a breakout this quarter remains muted.
Undervaluation signals could prompt institutional accumulation, alongside HODLing behavior that maintains support above $80k. However, retail inflows remain tepid, dampening bullish momentum. In essence, mitigating sell-side liquidity from derivative markets and encouraging retail participation are crucial for a bullish breakout to occur. While the potential for a rebound is on the horizon, the market is still waiting for significant shifts in sentiment and participation from retail investors before a breakout can happen.
