The fact that Bitcoin recently fell below $60,000, hitting the lowest level of the current cycle, has re-accelerated the discussions on whether a bottom level has occurred in the market. Crypto asset manager Grayscale gave a cautious answer to this question in its latest market assessment.
What does Grayscale’s valuation mark say?
According to the company’s analysis, Bitcoin is traded in a region that can be considered cheap at current levels. However, it was stated that prices have not yet fallen to the deeply discounted levels as in the sharp sales period seen after the FTX crash. Therefore, the report points to cautious optimism rather than confirmation of a strong bottom.
Grayscale used a composite on-chain valuation indicator in its valuation. This indicator takes the unrealized profit or loss of Bitcoin investors, the price’s position against a long-term valuation benchmark based on coin days destroyed, and similar on-chain metrics, and calculates where the market stands relative to historical averages. Grayscale stands out as one of the largest crypto asset managers known for its digital asset-focused investment products.
Mini dictionary: Coin days destroyed is an on-chain indicator that measures activity when Bitcoins that have been sitting in the wallet for a long time move. When the movement of older coins increases, it can be considered a change in long-term investor behavior.
According to Grayscale, on-chain data indicates Bitcoin is an undervalued asset, but prices have yet to reach discounted territory as steep as seen in previous major market breakouts.
There may be a more limited decline compared to past cycles
The report evaluated that despite the recent decline, the current bear market may remain shallower than previous periods. It was stated that the weaker bull period and the relative improvement in the market structure were behind this view. In other words, even if the selling pressure continues, it is thought that there may not be as deep a deterioration as in the past.
The signal given by the composite indicator also supports this framework. According to data, Bitcoin price is significantly below its long-term average. However, this alone does not mean that the price has definitely bottomed; it merely shows that the asset has moved into lower valuation territory in historical comparisons.
Regulatory process and leverage pressure come to the fore
According to Grayscale, whether the market has truly established a bottom is also closely tied to the latest developments around the CLARITY Act. How this bill, which aims to shape the regulatory framework for digital assets in the USA, progresses in the Senate process may have a significant impact on investor perception.
On the other hand, the amount of leverage in the market continues to be one of the most watched topics. The report emphasized that it is critical to what extent large Bitcoin investors carrying positions with high leverage can balance their balance sheets. It was noted that if this balance is not achieved, compulsory liquidations and additional downward pressure may come to the agenda again in the short term.
Although this chart reveals that there are some signs that Bitcoin prices are approaching the cheap zone, it indicates that both regulatory developments and leverage-related risks will continue to be decisive on the direction of the market.
