With Bitcoinโs price hitting a new cycle low1 under $60,000, many market participants are asking: Is Bitcoin cheap yet? The answerโaccording to the signal from a range of onchain valuation indicatorsโis yes, but not as much as previous cyclical lows (e.g., post FTX-collapse). Whether we have hit bottom this time depends on the regulatory outlook and on how large leveraged BTC holders perform in the short run.
As shown in Exhibit 1, a composite onchain valuation indicator (comprising a weighted average of three distinct measures2) suggests that BTC price is well below its long-term average, implying that Bitcoin is undervalued, but not as cheap as previous market bottoms. We believe that this bear market may be shallower than in the past, given a more muted preceding bull market, as well as improvements in market structure from ETP availability, wealth platform deployment, and other types of institutional adoption.
So where do we go from here? We believe investors can focus on two key short-term catalysts: 1) progress on the CLARITY Act in the Senate, and 2) whether levered Bitcoin holders can stabilize their balance sheets. We remain optimistic about CLARITY but prediction markets say itโs a tossup.
That said, we believe that current price levels offer an opportunity for investors with long-term investment horizons to consider dollar-cost averaging their Bitcoin purchases. More tactical traders may want to consider waiting on CLARITY.
Key Takeaway: Onchain metrics suggest Bitcoin is undervalued, but not as cheap as previous cycle lows. Whether we have found the market bottom will depend on upcoming catalysts and the CLARITY Act, but we believe this is a buying opportunity for investors with long-term horizons.
Exhibit 1: Bitcoin valuation indicator below long-run average
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