Four Key Bitcoin Metrics Indicate $80K BTC Price is a Bargain

The price of Bitcoin (BTC) dipped from $87,241 to $81,331 between March 28 and March 31. This 6.8% decrease erased gains accrued over the previous 17 days. The correction led to the liquidation of $230 million in bullish BTC futures positions and closely followed the downward trend seen in the US stock market, notably with the S&P 500 futures hitting their lowest levels since March 14.

On March 31, Bitcoin struggled to maintain a price above $82,000. However, four essential indicators suggest strong investor confidence and potential signs that Bitcoin may soon decouple from traditional markets.

Chart comparing S&P 500 index futures and Bitcoin/USD. Source: TradingView

Traders are concerned about the effects of the ongoing global trade war on economic growth. This concern has grown since the announcement on March 26 of a 25% US tariff on foreign-made vehicles. Reports indicate that Goldman Sachs has revised its year-end S&P 500 target downward from 6,200 to 5,700, while Barclays has adjusted its projection from 6,600 to 5,900.

Interestingly, despite these concerns affecting risk perception among investors, gold prices soared to a record high above $3,100 on March 31. Gold is often viewed as a safe haven during turmoil, especially as traders opt for alternatives over cash. In tandem, the US dollar has weakened against other currencies, with the DXY index falling from 107.60 in February to 104.10.

Signs of Strength in Bitcoin Metrics

The narrative surrounding Bitcoin as "digital gold" and an "uncorrelated asset" is being scrutinized. Even so, Bitcoin has shown a 36% gain over the past six months, while the S&P 500 index has experienced a decline of 3.5% during that same timeframe. Several Bitcoin metrics continue to exhibit strength, indicating that long-term investors are not swayed by temporary correlations as central banks engage in expansionary policies to avert an economic crisis.

One such metric is Bitcoin's mining hashrate, which measures the computing power dedicated to validating transactions on the network. Recently, the 7-day average hashrate reached a peak of 856.2 million terahashes per second on March 28, reflecting growth from 798.8 million in February. This indicates no signs of panic selling from miners, evident in the relatively low flow of Bitcoin from miners to exchanges.

Bitcoin mining hashrate over past 7 days, expressed in terahashes per second. Source: Blockchain.com

Historically, downturns in Bitcoin prices have been linked to periods of fear, uncertainty, and doubt (FUD) regarding miner profitability. On March 30, the 7-day average of net transfers from miners to exchanges was just 125 BTC, a figure much lower than the estimated 450 BTC mined daily.

Bitcoin's 7-day average net transfer volume from/to miners. Source: Glassnode

In a sign that miners remain optimistic, Bitcoin mining company MARA Holdings announced on March 28 that it plans to sell up to $2 billion in stocks, which will help expand its Bitcoin reserves and support general corporate purposes. This move follows GameStop (GME), which filed a proposal on March 26 for a $1.3 billion convertible debt offering, adjusting its reserve strategy to include Bitcoin and stablecoin acquisitions.

Decrease in Cryptocurrency Exchange Reserves

Data from Glassnode indicates that cryptocurrency exchange reserves have fallen to their lowest levels in over six years, sitting at 2.64 million BTC as of March 30. This notable drop typically suggests that investors prefer to hold onto their coins rather than trading them, which is significant given Bitcoin's 5.1% price decline over the previous week.

Moreover, the near-zero net outflows in US spot Bitcoin exchange-traded funds (ETFs) between March 27 and March 28 further signal confidence from institutional investors.

In summary, Bitcoin investors maintain a strong sense of confidence driven by the record-high mining hashrate, growing corporate adoption, and the lowest exchange reserves in six years, indicating a long-term holding trend.

This article aims to offer general insights and should not be viewed as legal or investment advice. The perspectives shared here are those of the author and do not reflect any official stance.

Bitcoin, Market, Investors, Mining