Bitcoin’s (BTC) price has recovered after plunging to an undervalued territory a week ago. Amid the price fluctuations, the asset’s demand has remained positive.
A weekly report from on-chain analytics platform CryptoQuant shared with CryptoPotato revealed that BTC’s price may have bottomed as its latest descent crushed the short-term holders’ unrealized profit margins to 0%.
Bitcoin Reaches Undervalued Territory
On January 23, bitcoin touched a two-month low of $38,000, becoming undervalued in the short term. BTC’s undervaluation was seen in a negative Coinbase premium, as the asset was traded at a cheaper rate on the crypto exchange.
Another sign of BTC’s undervaluation was Bitcoin miners getting “extremely” underpaid. This may have led to an uptick in selling pressure from miners as they unleashed the biggest selling wave since May 2023 a couple of days ago.
In addition, the unrealized profit margins of short-term holders decreased to 0%, and they sold their assets at a loss for the first time since October. However, CryptoQuant believes a price rally may soon occur as unrealized profit margins falling to zero is a criterion for BTC to resume its ascent.
Substantial Returns Expected in H2
Following BTC’s bounce to the $43,000 level on January 29, buy orders have dominated the perpetual futures market as traders close their short positions due to the price increase. This is evident in the taker buy-sell ratio, which is soaring above one for the first time since early December.
While BTC hovered around $42,100 at writing time, CryptoQuant believes the second half of the year would see the cryptocurrency record substantial returns as the first half of a halving year is historically flat to slightly negative for the digital asset.
On the other hand, demand for BTC has remained positive. Whales have been on an accumulation spree, increasing their holdings to levels last seen in December 2022. Additionally, the outflows from the Grayscale exchange-traded fund (ETF) have eased recently, with buying from the other products, especially those of BlackRock and Fidelity, offsetting the sales.
Notably, the total BTC holdings of the other nine spot ETFs have grown to new levels above 150,000.
Meanwhile, stablecoin liquidity is also positive, with Tether’s (USDT) market cap rising to fresh highs of $96 billion, with a daily increase of $800 million on January 22.