The price of the BTC has already doubled, and is even close to tripling from its 2020 low in March. Despite this, a metric called Puell Multiple indicates that there is still room for further gains, as it shows signs that the price is undervalued.
Bitcoin is trading at the time of writing at USD 9,781, and is consolidating into a small range. This is in an ongoing attempt to overcome the psychological barrier of USD 10,000.
The current price comes after the crypto market fell on March 12 to the same level as traditional markets, where Bitcoin fell to a low not seen since March 2019, at $3,850.
This huge recovery may make many investors think that the largest crypt currency is overbought. However, today’s metrics indicate just the opposite. The price is undervalued, so there is still room for further gains.
About the metrics that indicate that the BTC price is undervalued
The data provided by this metric is obtained by dividing the daily BTC issue value in USD by the daily issue on a 365-day moving average.
The current value provided by this metric is below 0.5, according to the Glassnode provider.
When this value is below 0.5, it is indicating that the currencies being issued daily are priced rather low compared to the historical average.
The metric is also used to identify the end of bear markets. Generally they occur when the data thrown by it falls below 0.5.
This interesting tool is directly related to price movements. When the price falls, the USD value of the daily BTC issue falls. This leads to an imbalance indicating whether the price still has room for
falls or if, on the contrary, it is significantly undervalued, as it is today.
When we speak of daily issuance, we refer to the amount of new currencies that are issued to the crypto market thanks to mining. Coins that are received as rewards for solving the operations needed to validate blocks of orders.