As declines in the leading cryptocurrency Bitcoin deepened, the price fell below $70,000 for the first time in almost 15 months since November 2024.
Bitcoin (BTC) is erasing all the gains it made since the November 2024 US presidential election, and it is predicted that Bitcoin is in a bear market and the decline will continue.
However, one analyst argues that Bitcoin is trading at a discount of over 40% compared to its long-term historical trend value.
An analyst named David used a power law valuation model to determine Bitcoin’s fair value to be $122,762.
Based on the current price level, this represents a difference of approximately $53,000, or 70%.
The analyst argued that the current price declines are due more to forced flows in derivatives markets, such as hedging and liquidation-related sales, rather than long-term investors selling BTC.
One of the metrics highlighted by the analyst was Bitcoin’s z-score. This data measures how much the current price has deviated from the long-term trend, and the analyst stated that its current value is -0.76. This indicates that the price has diverged from the long-term trend and fallen well below it.
The analyst concluded by highlighting the high volatility, noting that the 20-day implied volatility was above 43, and the total open interest in futures and options exceeded $2.3 billion.
Under these conditions, the analyst estimated a 70% probability of a squeeze if the Bitcoin price starts to rise, noting that positions could change very quickly. He also added that a sharp reversal in Bitcoin could occur at this point.
*This is not investment advice.
