- According to Grayscale’s latest research report, on-chain valuation metrics are showing that BTC is trading below its long-term average at $60,000.
- This indicator is telling that BTC is cheap, but not as much as previous cyclical lows during previous crashes like the FTX bear run in 2022.
- The company stated that the ongoing regulatory developments around the CLARITY Act and the stability of leveraged BTC holders.
On June 9, Grayscale shared a report regarding Bitcoin’s current price movement amid the bearish sentiment in the overall crypto market.
Grayscale Research Says, This Bear Market is Shallower Than Previous Cycles
According to the research by Grayscale, on-chain data suggests that Bitcoin is currently trading below its long-term average, and it looks undervalued. However, the company mentioned that the price of Bitcoin is not as cheap as it was during the past bear market cycle during the FTX collapse in 2022.
The research stated that, “On-chain metrics suggest Bitcoin is undervalued, but not as cheap as previous cycle lows. Whether we have found the market bottom will depend on upcoming catalysts and the CLARITY Act, but we believe this is a buying opportunity for investors with long-term horizons.”
To do this research, Grayscale has used a composite on-chain valuation indicator. This is an average of many popular metrics. According to this indicator, Bitcoin is selling at a discount compared to its previous norms. However, the company made it clear that the current bear market has been mild in comparison to the previous cycles.
“We believe that this bear market may be shallower than in the past, given a more muted preceding bull market, as well as improvements in market structure from ETP availability, wealth platform deployment, and other types of institutional adoption,” stated the research.
In the report, the investors are currently focusing on the regulatory developments around the digital asset sector and how leveraged BTC holders are performing in the short term. Grayscale has mentioned two factors behind BTC’s price movement on the short-term chart.
The first one is the progress in the Digital Asset Market Clarity Act (CLARITY) in the Senate. In May, the Senate Banking Committee approved the CLARITY Act after a long delay in the process.
Senator Cynthia Lummis stated in the post on X, saying that, “I’ve spent years building toward this moment. The Clarity Act is the most consequential financial legislation of this generation, and we are going to get it done.”
The major factor to watch for investors is whether leveraged Bitcoin holders will be able to stabilize their balance sheet.
“We believe that current price levels offer an opportunity for investors with long-term investment horizons to consider dollar-cost averaging their Bitcoin purchases. More tactical traders may want to consider waiting on CLARITY,” a Grayscale researcher said.
Bitcoin Struggles to Recover Amid Major ETF Outflows
According to CoinMarketCap, BTC is currently trading at around $61,901 after witnessing a drop of 21% in the last 30 days.
This turmoil in the financial world has created intense selling pressure in the crypto market as investors have started pulling out their money. Bitcoin exchange-traded funds (ETFs) like BlackRock ETFs have witnessed the longest streak of outflow of its history, which lasted for 13 days. In total, investors have withdrawn around $4.4 billion worth of investments.
Even BTC ETFs are still witnessing major outflows. On June 5, BTC ETFs recorded an outflow of around $325.7 million, according to Farside. On June 8, it witnessed an outflow of around $91.4 million. This is showing the depleting trust of institutional investors in the crypto market during high volatility periods.
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