Is Bitcoin Currently Undervalued?
Some market analysts suggest that strong fundamentals indicate an undervaluation and a bright future for Bitcoin.
How It Turned Out
Despite some pretty pessimistic predictions of a Bitcoin slump towards the $50,000 mark this past weekend, the cryptocurrency remained stable. Those foreseeing this dip pointed to large-scale liquidation of long bets on crypto in the preceding week, reaching around $94 million. Market sentiment was also down significantly, with the Fear and Greed Index dial moving from "fear" to "extreme fear". So far, things haven’t gone nearly as badly.
However, what actually happened was a solidifying of Bitcoin's trading price, which stayed within the same range it occupied during the week, its value fluctuating between $55,000 and $54,000. Other major crypto tokens followed suit, showing small increases. Taken together, the likes of Ethereum, Solana, and Cardano's ADA rose by 0.5%.
In the meantime, over in the real world of crypto transactions, usage appears relatively unaffected by these events. With the currencies holding ground over the weekend, they remain a terrific alternative payment method for online transactions.
Proving popular among online shopping platforms and gaming sites, the march toward mainstream acceptance continues unabated. As iGaming expert Wendy Prinsloo notes, consumers at online casinos still favor crypto for its security and efficiency. Between the perks that come with easy withdrawal processes enabled by blockchain technology, players have also been flocking to crypto-centric platforms for benefits like anonymous play and faster payouts.
This is all especially encouraging in light of the impact of the latest US jobs report painting a picture of a weaker labor market, which was a further catalyst for another round of cryptocurrency liquidation. On Friday this brought the total liquidations of crypto longs to over $220 million.
Upcoming Influencing Factors
However, despite these positives for Bitcoin, it should also be kept in mind that the market is still in what one might call an observation phase, ahead of macro developments in the week ahead. Market analysts are awaiting the release of CPI and PPI market indicators. The effect of the Presidential debate is also a factor that sends the market toward a more cautious approach.
Analysts are typically split in their assessments. Some feel that the disappointing US payroll figures are portraying a weaker labor market. Others counter that an unexpectedly lower employment rate is moving the economy away from previous fears of a coming recession.
The Presidential debate is likely to have less of an impact, with both candidates voicing some measure of support for crypto. Kamala Harris is in favor of policies to expand the cryptocurrency industry, while Donald Trump wants the US to become a global crypto hub.
The Argument for Undervaluation
Presto Research analysts believe that Bitcoin in particular is currently significantly undervalued. To support his view, they point out that the market is ignoring a crucial fundamental—the network security factor. They cite that the hash rate securing the network has reached a record high of 679 EH/s. This makes it by far the most well-protected.
According to them, this indicates that Bitcoin's value is lagging behind key fundamentals like these. Presto's latest daily market brief states that its traders find Bitcoin to be very attractive at current prices. The reasoning is that this ever-increasing security will outlast current macroeconomic worries.
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