As Bitcoin price hits a new milestone near $80,000, investors weigh the next move based on key on-chain metrics.
With Donald Trump’s victory and the Federal Reserve’s rate cut this week, Bitcoin bulls are showing strong momentum while defending $75,000. Earlier today, Bitcoin price hit a new all-time high, breaking through the $77,000 level. Investors are curious whether this rapid rise will bring some profit-taking or whether the rally has more momentum.
5 On-Chain Metrics Prove Bitcoin is Undervalued
As Bitcoin price hits new all-time highs, the asset has entered a price discovery zone with no previous history on technical charts. However, on-chain indicators can help us make the right decisions about what investors should do next. Let’s look at five indicators that prove Bitcoin is undervalued.
Rainbow Chart
Blockchain analysis platform Lookonchain shows that the BTC Rainbow Chart is a long-term valuation tool that will use a logarithmic growth curve to predict future BTC price trends. According to the updated Rainbow2023 chart, Bitcoin prices are still undervalued.
Relative Strength Index (RSI) Chart
Currently, BTC’s relative strength index is 70.83, which, compared to previous readings, suggests that the price has yet to peak. The RSI is a key indicator in determining whether an asset is in overbought or underbought territory.
BTC price 200-week average heat map
The 200-week moving average heat map shows that Bitcoin’s current price point is still in the blue zone, indicating that the price has not yet reached its peak. According to the heat map, this indicates a favorable environment for holding and potential buying.
Cumulative value of coins destroyed (CVDD)
As shown in the figure below, when the Bitcoin price touches the orange line, it indicates that the market is undervalued, which is a favorable buying opportunity. The current CVDD (cumulative value destroyed days) data shows that the BTC price has not yet reached its peak.
Two-year multiplier for Bitcoin price
According to the 2-year MA multiplier, BTC price is currently between the red and green lines, indicating that the red line associated with the market top has not yet been reached. This suggests that the market has room to grow before reaching a potential peak.
Will the current FOMO drag down BTC?
BTC quickly rose 10% in the week before the US election and FOMC meeting, and some market analysts expected the rally to pause for now. Blockchain analysis platform Santiment reported that social sentiment has changed as Bitcoin hits a new all-time high.
Historically, when enthusiasm for BTC above $80,000 gets too intense, prices tend to pull back. Investors are advised to keep an eye on this trend and take advantage of the public’s FOMO (fear of missing out) and FUD (fear, uncertainty, and doubt) reactions, the report states.
However, in the latest Bitcoin vs. gold comparison, VanEck CEO said that Bitcoin price could easily reach $300,000.
