• An indicator tracking transactions in profit and loss has yet to repeat its traditional bear market bottom sequence, according to CryptoQuant.
• Bitcoin may not be at a good value enough for a macro price bottom, with around 30% of transactions performed at a loss.
• Previous crosses of this indicator have occurred rarely, in June 2016 and May 2020.
Bitcoin has been slowly drifting closer to the $16,000 mark in the past few weeks, and many analysts have been talking about the possibility of a macro price bottom forming. However, according to research from CryptoQuant, the cryptocurrency may not be undervalued yet.
The analysis from CryptoQuant looked at an indicator tracking transactions in profit and loss and found that it has yet to repeat its traditional bear market bottom sequence. This indicator, which looks at unspent transaction outputs (UTXOs) in profit and loss, currently shows around 30% of transactions performed at a loss. According to CryptoQuant, when the UTXOs in Profit and Loss indicator were crossed during the past three Bitcoin halvings, this typically signalled a floor in price for the cryptocurrency.
However, at the time of writing, this indicator has not yet crossed and does not show that Bitcoin is undervalued. The accompanying chart from CryptoQuant shows that previous crosses of this indicator have occurred rarely, in June 2016 and May 2020. The latter came in the aftermath of the COVID-19 cross-market crash in March 2020 and also coincided with Bitcoin’s latest block subsidy halving event.
It’s worth noting that the indicator is not the only one pointing to a potential macro price bottom. MAC_D notes that there are other indicators that are pointing to the 2022 bear market bottom already forming. That being said, the UTXOs in Profit and Loss indicator can provide a clear buying timing when the crossover occurs.
At the end of the day, it remains to be seen whether or not Bitcoin will hit a macro price bottom in the near future. For now, it looks like the cryptocurrency may not be undervalued yet, according to CryptoQuant’s analysis.