Bitcoin [BTC]had crawled back above the key resistance at $70,000 at the time of writing. It noted a surge in demand around the $65k zone over the weekend, despite gloomy news about the broader market. However, despite the price increase, Bitcoin is still trading a significant distance from the mining cost of $89,000 – $91,000.
AMBCrypto previously reported that AC dynamics revealed a bullish sign for prices. The Inter-exchange flow pulse metric experienced a bullish crossover, a development that historically points to early cycle accumulation phases.
Could this be the start of the next powerful Bitcoin rally?
“Bitcoin is dead,” says Rainbow Chart
Source: Blockchain Center
The Bitcoin Rainbow Chart is a long-term logarithmic chart that maps whether Bitcoin is overvalued or undervalued in the long term. Some investors watch this chart to see if there are cyclical tops and bottoms.
At the time of writing, BTC was trading in an extremely undervalued area. The purple area on the map showed that it was so cheap that it was considered the ‘Bitcoin is dead’ zone.
Can’t go anywhere but up?
According to crypto analyst Axel Adler Jr Observations show that short-term holders are still suffering losses. The STH supply dropped from 6.06 million BTC to 5.92 million, meaning 140,000 BTC left the cohort.
This may be the result of capitulation. The maturation of holdings of coins (their age exceeded the STH threshold of 155 days) also explained the decline in STH supply.
The realized price, or average cost basis of all BTC in circulation, was $89,000. The market price was $70,000 – a difference of 21.3%. The analyst argued that such a gap has created a supply surplus for Bitcoin. Short-term holders at a loss would want to use rallies to sell their BTC without realizing a loss.
Finally, the LTH/STH SOPR metric showed that short-term holders sold at a loss. Meanwhile, LTHs weren’t selling, but they weren’t able to absorb supply either. The SOPR ratio was 0.89.
At the bottoms of the bear markets in 2018 and 2022, the value had fallen to 0.48 and 0.50, respectively.
It might therefore be premature to speak of a structural low here.
Final summary
- Bitcoin’s Rainbow Chart showed BTC at an extremely undervalued price level.
- On-chain metrics indicated a significant supply surplus to $89,000, and the current rebound may not be enough to trigger a long-term low.