As volatility becomes the new norm, the recent drop in bitcoin goes beyond a simple technical correction. It reflects a sharp disengagement of institutional capital and a reassessment of the dynamics of the crypto market. Amidst ETF panic and rarely observed undervaluation signals, the leader of cryptocurrencies finds itself at a critical crossroads.
In summary
Bitcoin is experiencing a significant drop, reaching a valuation zone described as a “fire sale” by Bitwise.
The MVRV z-score indicator over two years has fallen below -1, signaling a historical undervaluation of the asset.
Bitcoin ETFs have faced massive withdrawals, with $1.35 billion withdrawn in a week.
Bitwise observes a marked decline in market sentiment, equivalent to that of October 2023.
A historically low valuation according to Bitwise
While bitcoin has just spent four months in the red, Bitwise's analysis team in its February 1 report warns: “we have entered a fire sale valuation zone”
This warning is based on the MVRV z-score indicator over two years, a reference tool in on-chain analysis. This indicator is now below the -1 mark, signaling an extreme undervaluation of bitcoin, a limit rarely surpassed outside of major capitulation phases.
