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

Bitcoin (BTC) experienced a significant price drop, falling from $87,241 to $81,331 between March 28 and March 31. This decline marked a 6.8% correction that wiped out gains accumulated over the previous 17 days. The correction resulted in $230 million being liquidated from bullish BTC futures positions. This price movement coincided with a downward trend in the US stock market, particularly as the S&P 500 futures dropped to their lowest levels since March 14.

On March 31, Bitcoin struggled to maintain a price above $82,000. However, four critical indicators suggest that investor confidence remains strong, and there may soon be a decoupling of Bitcoin from traditional market movements.

Comparison of S&P 500 index futures and Bitcoin/USD. Source: TradingView

Traders are currently concerned about the potential impact of the global trade war on economic growth, a sentiment heightened after the announcement of a 25% US tariff on foreign-made vehicles on March 26. Following this, analysts at Goldman Sachs revised their year-end S&P 500 target down from 6,200 to 5,700 for the second time. Similarly, Barclays analysts adjusted their forecast from 6,600 to 5,900.

Despite these worries impacting traditional markets, gold has notably risen, reaching a record high above $3,100 by March 31. This shift illustrates that traders are increasingly seeking alternatives to cash, especially as the US dollar weakens against other currencies, with the DXY index dropping from 107.60 in February to 104.10.

Strength in Bitcoin Metrics and Long-Term Investors' Confidence

Even with rising questions about Bitcoin's status as “digital gold” and its supposed detachment from traditional assets, it has achieved a 36% gain over the past six months while the S&P 500 index has fallen by 3.5%. Various Bitcoin metrics show resilience, indicating that long-term investors are not shaken by the short-term correlations as central banks adopt expansionary policies to mitigate recession risks.

Notably, Bitcoin's mining hashrate, which tracks the computational power used to confirm transactions, reached an all-time high recently.

Bitcoin's mining hashrate reached 856.2 million terahashes per second on March 28. Source: Blockchain.com

This increase from 798.8 million terahashes in February shows that miners are not panic-selling, as evidenced by the transfer patterns to exchanges. In earlier downturns, price declines often coincided with scenarios where miners sold off to stay profitable. However, data indicates that the 7-day average net transfers from miners to exchanges on March 30 was only BTC 125, significantly less than the BTC 450 mined daily.

Average net transfer volume from/to miners in BTC. Source: Glassnode

On March 28, Bitcoin miner Marathon Digital Holdings filed a prospectus to sell up to $2 billion in stock aimed at expanding its Bitcoin reserves and for other corporate purposes. This announcement follows GameStop’s recent move to file a $1.3 billion convertible debt plan while revising its investment strategy to include potential Bitcoin and stablecoin acquisitions.

Declining Crypto Exchange Reserves

Another significant observation is that reserves on cryptocurrency exchanges fell to their lowest levels in over six years on March 30, dropping to BTC 2.64 million. This decline in available coins for immediate trading generally indicates a tendency among investors to hold rather than sell. This trend emerges despite Bitcoin's price falling by 5.1% within a week.

Moreover, the recent near-zero net outflows in US spot Bitcoin exchange-traded funds (ETFs) between March 27 and March 28 also reflect a lingering confidence among institutional investors.

In summary, the confidence of Bitcoin investors is bolstered by record-high mining hashrate, corporate adoption trends, and a significant drop in exchange reserves over the last six years, all of which point toward a long-term holding strategy.

This article aims to provide general information and should not be interpreted as legal or investment advice. The opinions presented here ultimately reflect the author's views and do not necessarily align with any external organization.

Bitcoin, Investors, Market, Economy