Key Points
- Despite recent accumulation, Bitcoin’s short-term bias remains bearish, with potential for a deeper correction.
- On-chain metrics and Santiment data suggest the asset is undervalued, indicating a potential buying opportunity.
After experiencing a drop to $56.8k, Bitcoin appears to be in a short-term bearish phase.
Though there are indications of accumulation and demand, the consolidation period may persist for a while longer.
Market Analysis
In the past week, Bitcoin [BTC] experienced a 4.6% increase.
The inflow chart for the Bitcoin ETF also suggested a strengthening of bullish momentum.
The Grayscale Bitcoin ETF GBTC, previously known for consistent outflows, saw a turnaround earlier in May.
However, this doesn’t imply a shift in its short-term bias towards bullishness.
The technical structure still suggests a bearish trend.
Examining the on-chain metrics can provide insights into potential future price directions.
On-Chain Metrics
CryptoQuant Insights analyst Kripto Mevsimi noted that the recent correction led to a decline in the Bitcoin supply in profit.
A band system was used to identify the overheated zone, the bottom discovery, and the threshold for optimism and pessimism.
At the time of writing, the metric was approaching this threshold.
If it drops below, we could see a deeper correction as BTC moves towards bottom discovery.
As long as the metric remains above this line, market sentiment is likely to stay positive, with bulls hopeful for a recovery.
In the 2016 cycle, the supply in profit metric remained in the overheated zone for months without a significant correction.
The July 2020-January 2021 run also frequently saw the overheated zone.
While Bitcoin’s long-term bias is bullish, the short-term remains bearish, indicating the possibility of a deeper correction.
Santiment Metrics
AMBCrypto analyzed Santiment metrics to determine if a buying opportunity is present.
The 30-day MVRV has been negative for a significant part of the past month, suggesting that the asset is undervalued.
However, the 3-day weighted sentiment has remained negative over the past two weeks.
The mean coin age metric seems to have halted its previous downtrend over the past month.
It has slowly risen over the past month.
Coupled with the MVRV, this could be a signal to buy Bitcoin.
However, the price action indicates that bears currently dominate, and a drop to $55k could occur this summer.
