Bitcoin in the accumulation phase

06 September 2022 355
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Long-term bitcoin investors are restocking as prices fall, despite a generally bleak macroeconomic outlook, with some models suggesting the world's largest cryptocurrency being undervalued in the current price range of $20,000-21,000. 

The Puell Multiple, a tool that measures annual revenue growth for bitcoin miners, indicates buying interest among investors and places bitcoin with 0.5 score in the green zone for investors, who are looking to create long-term exposure. As reported, the metric entered the green zone during the last phase of the previous bear market, preceded by weeks of price consolidation and subsequent recovery.

The Puell Multiple, calculated by dividing daily bitcoin issuance in U.S. dollars by the 365-day average, points to newly minted coins being undervalued compared to the annual average. It might demonstrate that miners' current profits from bitcoin sales are relatively low, a move that previously marked a price floor. 

However, CryptoQuant analysts warned that the price floor is probably "still far away", citing fundamental concerns.

"The macro environment doesn’t give enough support to the bitcoin price as U.S. economic data is still poor," they said. "Economic slowdown happens faster than expected."

The U.S. Federal Reserve is likely to further tighten monetary policy, with some officials saying it is "unrealistic to expect easing anytime soon" - sentiment that has heightened concerns among investors.

Market analysts at cryptocurrency exchange Bitfinex said Monday that Bitcoin and Ether are currently experiencing a rise in the address number containing the two cryptocurrencies.

The holders’ balance sheet reached a record 12.92 million bitcoins, analysts said, and more than 60% of them are stored at addresses that have those spot positions for more than a year. They added that the number of addresses holding 1 to 10 bitcoins is about 750,000.

"A constant accumulation of bitcoins in bear markets demonstrates the strong commitment of numerous holders and long-term belief in the cryptocurrency," Bitfinex analysts concluded.

This content is for informational purposes only and is not intended to be investing advice.

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