Undervalued Bitcoin presents new buying opportunity

Bitcoin (CRYPTO:BTC) is currently showing signs of being undervalued, which analysts suggest presents a buying opportunity for investors. 

Illia Otychenko, lead analyst at CEX.IO, noted a 39% surge in active Bitcoin addresses over the past week, indicating increased demand and liquidity. 

This rise in activity, combined with a sharp drop in Bitcoin’s Network Value to Metcalfe Ratio (NVM), suggests the cryptocurrency may be trading below its intrinsic value.

Otychenko emphasised that the NVM ratio, which measures the relationship between Bitcoin’s market value and network activity, has reached levels not seen since Bitcoin’s all-time high. 

He pointed out that in previous instances where the NVM dropped significantly, Bitcoin's price rebounded, such as in late 2022 and September 2023. 

According to him, "Historically, when active addresses surge like this, it often precedes or accompanies price increases."

Currently, Bitcoin is trading at $62,120, slightly down by 0.6%, and is caught between its 50-day and 200-day simple moving averages (SMA). 

To break out of this consolidation, Otychenko believes Bitcoin needs to push above the 200-day SMA with higher trading volume to sustain upward momentum.

In a broader sense, analysts are rethinking Bitcoin’s role as a purely risk-on asset. 

Brian Dixon, CEO of OTC Capital, highlighted that institutions like BlackRock are now considering Bitcoin as a potential hedge against economic downturns, similar to gold. 

Dixon noted that this shift could redefine Bitcoin’s position in investment portfolios, offering protection against market volatility and making it a more attractive long-term investment.

At press time, the Bitcoin price was $60,385.33.