Key Points
- Bitcoin’s price performance outpaces Nasdaq 100 and S&P 500 indices, but recent pullback prompts investor concerns.
- MVRV score and strong fundamentals suggest Bitcoin is undervalued and has potential for future recovery.
Bitcoin’s price has seen a significant increase this year, outperforming well-known assets such as the Nasdaq 100 and the S&P 500 indices.
However, following the Federal Reserve’s indication of only two interest rate cuts in 2025, Bitcoin (BTC) has dropped to $97,000 from its all-time high of $108,427.
MVRV Score Indicates Bitcoin’s Value
The recent pullback in Bitcoin’s price has impacted investors, as shown by the net outflows of $276 million from spot ETF flows.
However, the Market Value to Realized Value (MVRV) indicator suggests that despite its recent record high, Bitcoin’s price remains relatively low.
The MVRV-Z score, which measures the market value and relative value of a coin, has fallen to 2.84 from last week’s high of 3.3.
Historically, an MVRV-Z score below 3.7 indicates an asset is undervalued.
Bitcoin’s Strong Fundamentals
In addition to the MVRV score, Bitcoin also has strong fundamentals.
The number of Bitcoins in circulation has decreased to a multi-year low of 2.24 million, suggesting more investors are purchasing and storing Bitcoins in self-custody wallets.
The stablecoin market cap has also increased to nearly $210 billion, up from $122 billion a year ago.
This increase in stablecoin value is generally a positive sign, indicating growing investor interest in cryptocurrencies.
Moreover, Bitcoin’s annual inflation rate has continued to decrease, falling to 1.12% from a 2015 high of nearly 12%.
This decrease in inflation rate is due to halving events and increased mining difficulty.
While further Bitcoin pullback is possible, its favorable MVRV score and strong fundamentals suggest a potential for higher value in the long term.