Bitcoin (BTC) Price Analysis: COO of 21st Capital Breaks Down Key Factors Influencing the Cryptocurrency\'s Trajectory

Sina G, the COO and co-founder of 21st Capital, provided a breakdown of the factors influencing Bitcoin's price trajectory today

Bitcoin price opened the weekend on a positive note, attempting to climb above $58,250. However, the flagship digital asset was unable to sustain the momentum and close above the 200-day Exponential Moving Average (EMA), leading to the formation of a bearish engulfing candlestick pattern on Sunday, signaling potential downside momentum.

This technical analysis comes together with a recent analysis from Sina G, the COO and co-founder of 21st Capital, who provided a breakdown of the factors influencing Bitcoin’s price trajectory today, particularly highlighting recent declines and evaluating its undervalued state through sophisticated metrics.

Bitcoin Price Correction: Historical Context And Macroeconomic Factors

Starting with a historical overview, Sina pointed out that Bitcoin had seen a drastic 26% decline from a March peak of $73,000, settling around $56,000 in recent weeks. This sharp decrease has been attributed to several macroeconomic and sector-specific factors.

According to him, Bitcoin’s fall from the $73,000 peak in March to $56,000 aligns with historical bull market corrections, which often see significant yet temporary retracements. The influence of Bitcoin ETFs was also crucial. Initially, these ETFs contributed significantly to the price surge from $16,000 to $73,000, as investors engaged heavily in a buy-the-rumor, buy-the-news strategy.

“Up to mid-march ETF flows were very strong and the market moved up. Since then ETFs slowed down and bankruptcy outflows took over, causing a weak price action all the way down to $56K,” Sina explained.

German Government Bitcoin Sales Impact On Price

A recent impact on Bitcoin’s price that has garnered attention is the selling activity of the German government, which disposed of Bitcoin seized in 2013 from the pirated content platform Movie2k.to.

“The government’s decision to liquidate approximately 10,000 coins across three transactions coincided directly with significant price drops on specific dates in June and July,” he noted. This selloff contributed to a steep 24% crash in June and July, which was exacerbated by the large volume of Bitcoin introduced into the market.

Is Bitcoin Undervalued? VPLI Metric Analysis

To address whether Bitcoin is currently undervalued, Sina turned to the Volatility-Adjusted Price Level Index (VPLI), a proprietary metric developed by 21st Capital.

“Currently, our VPLI is at -3.57, which indicates that Bitcoin is significantly below its fair price,” Sina stated. He further clarified that historically, a VPLI score of -10 corresponds with bear market bottoms, placing the current reading in a context that suggests Bitcoin is potentially undervalued.

“This puts us in the 41th percentile of values – i.e., Bitcoin has only spent 41% of below this VPLI reading (most of which during the bear markets). So the risk-reward balance is favorable,” he added.

Short-Term Indicators: German Government BTC Sales Continuation, Swaps Funding Rate

Looking forward, Sina highlighted two critical short-term indicators that could dictate Bitcoin’s immediate price movements: the continuation of Bitcoin sales by the German government and the behavior of the perpetual swaps funding rate.

“Recently, the funding rate has been negative, which is typically a bearish signal. This suggests that many traders are taking short positions, anticipating further declines, which paradoxically might indicate that the market is close to reaching a bottom,” he concluded.

At press time, BTC trades at $55,835.

The above is the detailed content of Bitcoin (BTC) Price Analysis: COO of 21st Capital Breaks Down Key Factors Influencing the Cryptocurrency's Trajectory. For more information, please follow other related articles on the PHP Chinese website!