Popular analyst Will Clemente says Bitcoin remains undervalued based on the strength of the leading cryptocurrency’s on-chain fundamentals.
In his latest weekly overview, Clemente highlights two surging on-chain metrics, which he says are significantly outpacing the rise of BTC’s value.
“In blue, illiquid supply shock ratio, which compares the movement of coins from liquid (weak hands) entities to illiquid (strong hands) entities. In purple, exchange supply shock ratio, which compares the amount of supply held on exchanges relative to overall circulating supply. Both of these are trending strongly upwards, with price lagging behind.”
According to Clemente, the sustained rise of the illiquid supply shock ratio and exchange supply shock ratio suggest that market participants continue to accumulate BTC.
The on-chain analyst adds that he’s looking at retail traders, as the cohort shows signs of increased buying and holding behaviors.
“The little guys have been buying BTC like crazy. Their holdings have not only increased as a percentage of overall supply, but also as a percentage of supply held by entities with little spending history (strong hands).
Green: percentage of supply held by retail.
Blue: percentage of illiquid supply held by retail.”
The on-chain analyst is also keeping an eye on the growth and behavior of new entities coming into the Bitcoin network. According to Clemente, investors who have entered the Bitcoin market are not looking to make a quick exit.
“New entities coming on-chain started trending down in March, while entities NET growth trended sideways/upwards. This means while new entities had been slowing down, there were even fewer dormant entities leaving. In other words, entities coming on the blockchain are staying.”
As market participants flash signs of HODLing (hold on for dear life) efforts, Clemente says that BTC needs to rise over 20% from its current price of around $45,000 to address the supply and demand disparities in the market.
“Bitcoin still needs to go to $55,000 – $57,000 just to make up for the current imbalance of liquid supply.”
Although Clemente is seeing mostly bullish signals for BTC, he notes that there are still a few red flags on-chain.
“The main bear case for Bitcoin from an on-chain perspective is the big drop-off in transactional activity. We’re still a rut looking at things like the mempool (valid transactions waiting to be confirmed by the BTC network), number of transactions, active addresses, etc. Would like to see these things pick back up, which I personally see as lagging indicators to price.”
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