Fidelity director states BTC could be ‘cheaper than it looks’

After analysing recent data, the global macro expert said BTC is “technically oversold”

Digital bitcoin on abstract background to make it look like it's travelling through space                                 
Some crypto analysts welcome the effects of a bear market on BTC – Photo: Getty Images

The lead cryptocurrency bitcoin (BTC) could be “cheaper than it looks” according to Jurrien Timmer, director of global macro for investment management services company Fidelity.

Via Twitter, Timmer explained that BTC’s price-to-network ratio is back to 2013 and 2017 levels, even though BTC has fallen back to 2020 levels in terms of price.

The price-to-network ratio is the crypto version of the price-to-earnings (P/E) ratio. The P/E ratio is simply the stock price divided by the company’s earnings per share for a designated period, such as the past 12 months. The P/E ratio conveys how much investors will pay per share for $1 of earnings.

A high ratio implies an asset is overvalued, while a low ratio suggests it is undervalued.

‘Price is now below the network curve’

Using charts, Timmer showed that the price of BTC is “now below the network curve”. The graph that displayed this shows BTC’s non-zero addresses against its price. 

The Fidelity director went on to say that BTC is “technically oversold” by showing the dormancy flow indicator from blockchain data and intelligence provider Glassnode, which indicated that it is now at levels not reached since 2011.

Crypto bear market

As of late, crypto has been termed to be in bear market territory. BTC has dropped to $21,088 and Ethereum (ETH) to $1,114.

However, some believe this is a good thing for the crypto space. In May, Mihailo Bjelic, co-founder of Polygon (MATIC), and Bertrand Perez, CEO of the Web3 Foundation, both spoke on the subject to CNBC while at the World Economic Forum (WEF) at Davos.

Perez explained that a bear market is good because it clears the crypto space of “the people who were there for the bad reasons”, leaving the “the legit ones” to focus on “developing on building and forget about the valuation of the token”.

Bear markets are also when “real services are built”, added Perez, because when “everything is great” during a bull market, “no one thinks about building, which is the wrong mindset”.

Also interviewed at Davos, Bjelic told CNBC: “I don’t think it can hurt confidence, especially in the long term.”

The co-founder of Polygon explained a bear market meant “everyone will get more careful in the medium and short term, which was required and is necessary”.

Bjelic added that he believed the crypto market became “maybe a little bit irrational or maybe more reckless to a certain extent” and when a bear market comes, a “correction is normally needed and, at the end of the day, healthy”.

Further reading

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