Bitcoin Composite Market Key Index (BCMI) Enters Historically Undervalued Zone at the Beginning of 2023

According to the latest analysis from CryptoQuant, the Bitcoin Composite Market Index (BCMI) has now fallen into the 0.2-0.3 range, entering a historically undervalued zone, which may indicate that Bitcoin is significantly undervalued.

The BCMI index is composed of MVRV, NUPL, SOPR, and the Fear and Greed Index, and is currently at a notably low level. While this does not predict an immediate price rebound, it suggests that market valuation and investor sentiment have retreated to early 2023 levels.

Specifically, by assigning a 30% weight to MVRV and a 25% weight to NUPL, the weighted BCMI index reveals that the current correction has brought Bitcoin’s value and investor sentiment back to a period of Bitcoin’s reset correction.

Additionally, Bitcoin’s 90-day simple moving average (SMA 90) continues to decline, indicating persistent downward pressure in the market. Analysts recommend waiting for this trend to stabilize before confirming that the selling activity has ended.

Current data suggests we are entering a “value accumulation zone,” and compared to the long-term bullish outlook, the downside is gradually becoming limited. However, we still need to wait for the price to stabilize to confirm clear bottom signals from this index.

On the trader sentiment front, analyst Ali Martinez pointed out that most Bitcoin traders are betting on higher prices. This optimistic sentiment has triggered a recent rally, resulting in nearly $80 million in short positions being liquidated.

As the short positions are largely cleared, the market’s balance begins to tilt toward the bulls. From the position distribution, the largest cluster of long positions is at key price levels of $70k, $65k, and $57k.

However, not all analysts are so optimistic. Some, like early Bitcoin advocate Davinci Jeremie, issued warnings that although Bitcoin’s price has recently rebounded, the market may not have truly reached the bottom of this cycle.

He also emphasized that Bitcoin’s recent dip below $60k is very similar to the decline in June 2022. Based on this, he believes the “maximum pain” moment in the market has not yet arrived, and there may still be “surrender events” of panic selling by investors in the future.

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