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After attaining $59,000 levels on Monday, May 3, Bitcoin has slumped back 4.5% and is currently trading at $55,677 with a market cap of $1.042 trillion. Although Bitcoin seems under selling pressure at this point, its on-chain fundamentals clearly point that the world’s largest crypto is undervalued at this stage.
Bitcoin’s Network Value to Transaction Ratio (NVT) is going south which is a bullish signal for the Bitcoin price. Citing historical chart patterns, crypto analyst Willy Woo shows that Bitcoin has always seen a strong bounce back after trading at similar NVT levels previously.
#Bitcoin price bouncing cleanly off levels of undervaluation unseen since Oct 2020 ($10.5k), and before that, Apr 2020 ($7.5k COVID market recovery). pic.twitter.com/lPYRNr8uDh
— Willy Woo (@woonomic) May 3, 2021
On the other hand, the BTC supply at exchanges has been constantly dropping. Last week, CoinGape reported how institutional players took off nearly 12K from the COINBASE exchange which most likely has gone to cold storage. Over the last five months, BTC supply at exchanges has been on a constant declining trend.
Fun Fact: If #Bitcoin keep moving off Coinbase at the rate they have over the last 5 months, the exchange will have 0 BTC left to sell in 454 days. pic.twitter.com/HuZ3BAxEtB
— William Clemente III (@WClementeIII) May 3, 2021
Tether (USDT) Stablecoin Demand Hits All-Time High
As per the on-chain data provider, the demand for the most popular stablecoin Tether (USDT) touched an all-time high last week. The outstanding USDT supply increased by 3% or $1.48 billion last week with the total minted supply reaching over $51.78 billion.
As a result, the Stablecoin Supply Ratio (SSR) has reached an all-time low of 9.6. This declining trend in SSR value shows that the global stablecoin supply is becoming larger in comparison to the Bitcoin market cap. The Glassnode report mentions:
“As the total supply of stablecoins increase, it suggests an increased ‘buying power’ of crypto-native capital that can be quickly exchanged and traded into BTC and other crypto-assets”.
On the other hand, the report also shows that there’s a growing conviction of HODLing Bitcoins among investors rather than liquidating it anytime soon. Thus, the dormant BTC coins have been growing in numbers suggesting strong conviction to HODL. As we can see in the below image, there’s a surge in the long-term holder net position change since April 8.
