Bitcoin Exits 'Deep Value' Era, Entering 'Momentum' Phase: On-chain Data Reveals
Summary:
On-chain data indicates a major shift in Bitcoin (BTC) pricing dynamics, taking it out of its "deep value" zone. Charles Edwards of Capriole Investments suggests Bitcoin's value, currently around $70,000, fairly reflects the energy consumption of miners active in its network. With miners profiting significantly despite selling large amounts of BTC, market indicators hint at likely increases in Bitcoin prices, transitioning Bitcoin into its "momentum era". Not all analysts agree, with some predicting an extended market correction and others suggesting more downside unless Bitcoin and Ether (ETH) significantly breach current highs.
Bitcoin (BTC) is no longer in the "deep value" zone according to on-chain data that indicates a substantial change in the pricing of the digital currency. Charles Edwards, the founder of Capriole Investments - a fund focused on Bitcoin and other digital assets - announced on platform X (known formerly as Twitter) on March 7 that the market is entering a new phase.
For the first time in two years, the current pricing of Bitcoin, especially after reaching historical highs, is considered "fair", according to on-chain data analysis. This major shift in BTC's price behavior implies that the bulls are now in control. Edwards indicated that at around $70,000 per Bitcoin, the price accurately reflects the energy consumption of miners active in the Bitcoin network.
Capriole's Bitcoin Energy Price index, which assesses the currency according to this criterium, suggests that this balance is about to shift. Edwards refers to this metric as "Bitcoin's intrinsic value derived solely from the input of pure energy to the network", void of any complicated mathematical formulas or laws. He states that Bitcoin's fair value has been accurately predicted by the energy its network consumes since its inception.
Bitcoin's recently skyrocketed energy price, coupled with the increased profits of miners currently selling significant amounts of BTC, are among a wide range of market indicators hinting at possible future increases in BTC prices. Thanks to a surge in Bitcoin's production cost, as well as an increase in the fees associated with Bitcoin mining, these investors are reaping substantial profit margins.
Edwards furthers that those hoping for cheap Bitcoin deals have missed their chance, suggesting that Bitcoin's value era has passed. In this new chapter, Bitcoin has transitioned into a momentum era.
However, not everyone shares this optimism about Bitcoin's future trajectory. Some analysts predict that the current historic highs may trigger a lengthy market correction, contradicting the notion that institutional demand will keep Bitcoin buoyant.
Venturefounder, a contributor to on-chain analytics platform CryptoQuant, suggests that a definitive breach of current highs by both Bitcoin and Ether (ETH), the largest altcoin, is needed. He anticipates more downside in April/May, leading up to the halving and ETH ETF approval, if new ATH breakouts do not occur this month.
In conclusion, although March appears to be vital for the anticipated bullish trend following a strong February, it is recommended that readers conduct thorough research prior to making investment decisions. This article does not provide investment advice or recommendations, and any trading or investment move can involve risk.
Published At
3/8/2024 1:25:00 PM
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