Bitcoin on track to be undervalued as stablecoin reserves drop to pre-2021 bull run levels


Share:
  • Bitcoin is not undervalued as on-chain profit and loss indicators predict BTC bottom is approaching. 
  • Unspent transaction output in profit and loss provides clear BTC buy signals when a cross is generated, the indicator is yet to show a cross in this cycle. 
  • Experts believe Bitcoin price is on track for a massive trend reversal as exchange stablecoin reserves drop to pre-2021 bull run levels. 

Bitcoin is on track to hit a cycle bottom and begin its recovery as stablecoin reserves across exchanges arrive at pre-bull run levels. Experts are closely watching Unsoent Transaction Output (UTXOs) in profit and loss for a cross, a buy signal that times when BTC is undervalued. 

Also read: Solana battles intense scrutiny after Samuel Bankman-Fried FTX empire collapse, will SOL survive in 2023?

Bitcoin is not undervalued yet despite stablecoin reserves hit pre-bull run levels

Bitcoin on-chain indicators currently signal that the asset has reached the undervalued area. However, unlike most cycle indicators like Puell Multiple and SOPR, Unspent Transaction Output Profit and Loss (UTXOs) is key in identifying when Bitcoin is undervalued. 

A cross in UTXOs profit and loss generates a buy signal for Bitcoin and affirms that BTC is undervalued. While other on-chain data helps understand the overall BTC phase, it is difficult to ascertain the buying time. When UTXOs in the profit and loss indicators were crossed, BTC price hit a floor, three halvings in a row. 

Bitcoin UTXOs in profit and loss

Bitcoin UTXOs in profit and loss

Bitcoin UTXOs in profit and loss 

Once a cross is generated in the chart above, Bitcoin could nosedive. Another key indicator of upcoming Bitcoin trend reversal is stablecoin reserves on exchanges. 

Stablecoin reserves on exchanges hit pre-bull run levels

Stablecoins like USD Tether (USDT) and USDC play a key role in Bitcoin price rallies. Since stablecoins are the point of entry, conversion of fiat to crypto, the flow of USDT and other stablecoins in the ecosystem has an impact on BTC price. Spot exchange stablecoin reserves have dropped to their pre-2021 bull run levels. At the same time, volatility in stablecoin inflows has hit an all-time high. 

Stablecoin reserves on spot exchanges

Stablecoin reserves on spot exchanges

An increase of stablecoin inflow to the exchange is considered rising demand for assets like Bitcoin. Holders of large volumes of stablecoins increase their transfer to exchanges before a trend reversal and rally in BTC. With rising demand and higher volatility in stablecoin inflows, Bitcoin price is preparing for the next bull run. 


Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Join Telegram

Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended content


Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended Content

Editors’ Picks

Week Ahead: Altcoin plays for traders as Bitcoin crosses $42,000

Week Ahead: Altcoin plays for traders as Bitcoin crosses $42,000

Bitcoin price hit $40,000 over the weekend as investors anticipate a spot BTC ETF approval in January. Bitcoin trades around $42,000 and shows no signs of stopping. This article will focus on what to expect this week and the outlook for BTC and if the fourth cycle is any different.

More Bitcoin News

Crypto exchanges serving Indian residents to comply with Anti-Money Laundering guidelines: Indian Parliament

Crypto exchanges serving Indian residents to comply with Anti-Money Laundering guidelines: Indian Parliament

Crypto exchanges serving Indian residents to face action if not compliant with Anti-Money Laundering and Countering of Financial Terrorism guidelines.The process of registering offshore exchanges, Virtual Digital Asset service providers has been initiated.

More Cryptocurrencies News

Dogecoin breaks key $0.088 barrier ahead of tenth birthday, 87% DOGE holders at profit

Dogecoin breaks key $0.088 barrier ahead of tenth birthday, 87% DOGE holders at profit

As Dogecoin (DOGE) approaches its tenth anniversary on Wednesday, the Shiba-Inu-themed meme cryptocurrency has surpassed a crucial resistance level at $0.088076, reaching the highest level since mid-April.

More Dogecoin News

Bitcoin price could rally to $45,000 ahead of BTC halving event in April 2024

Bitcoin price could rally to $45,000 ahead of BTC halving event in April 2024

Bitcoin price crossed the $41,000 mark on Binance, in its ongoing uptrend. BTC price rally is likely driven by the anticipation of Spot Bitcoin ETF approval. There are more catalysts driving BTC price gains in the current cycle.

More Bitcoin News

Analyzing potential $30k corrections ahead of BTC ETF approval

Analyzing potential $30k corrections ahead of BTC ETF approval

Bitcoin has slowed down its 2023 bull rally as it approaches the $37,000 level. After three weeks of consolidating around this level, BTC shows no directional bias whatsoever. Some investors speculate this could be an upward-sloping accumulation that leads to a $40,000 rally.

Read full analysis

BTC

ETH

XRP