Bitfinex Report Analyzes Bitcoin's Rebound and Potential Local Bottom

Crypto exchange Bitfinex has provided an in-depth analysis of the cryptocurrency market, focusing on bitcoin's recent recovery and its implications for future trends

Crypto exchange Bitfinex has analyzed several key metrics to assess the possibility of bitcoin approaching a local bottom in its latest Alpha report. The report examines the recent recovery in BTC, which surged nearly 28% from its recent low of $49,000, recovering above the critical $60,000 mark after a sharp sell-off in August.

The analysis highlights a significant rebound in bitcoin, which began after hitting a two-month low on Monday. BTC/USD surged nearly 28% from its recent low of $49,000, recovering above the critical $60,000 mark. This recovery occurred following a sharp sell-off in August, sparked by the U.S. Federal Reserve’s (Fed) recent interest rate hike of 75 basis points.

After rising to a high of $64,000 on Monday, BTC/USD dropped sharply on Tuesday morning, falling below the $60,000 level once again. However, the pair quickly recovered later in the day, surging past the $62,000 resistance level.

By Wednesday morning, BTC/USD had attained a 24-hour peak of $62,440. The world’s leading cryptocurrency was last trading up by 2.46% over the past 24 hours at a price of $62,300.

Despite bitcoin’s recent recovery, several analysts remain skeptical about the possibility of a sustained bull run. One analysis by crypto exchange Bitfinex has examined several key metrics to assess whether BTC may be approaching a local bottom.

According to Bitfinex, the Mayer Multiple, which is a technical analysis (TA) indicator used to determine whether an asset is overvalued or undervalued, dropped to 0.88, a level not seen since the FTX collapse. This indicator is calculated by dividing the asset’s price by its 200-day moving average (MA) and then multiplying the quotient by the square root of 365, the number of days in a year.

A Mayer Multiple of 1 or less typically indicates that an asset is undervalued, while a multiple greater than 2.4 generally suggests that the asset is overvalued. However, some traders believe that a multiple below 0.9 can also signal that an asset is nearing a bottom.

The report also highlights the high levels of unrealized losses among short-term bitcoin investors, which are the largest since 2022. This metric is calculated by multiplying the realized price of bitcoin by the number of coins held by short-term investors, which are defined as those who have held their coins for less than 155 days, and then dividing the product by the total market capitalization of bitcoin.

The resulting ratio, known as the Short-Term Holder MVRV Multiple, shows that short-term bitcoin investors are currently sitting on unrealized losses of about 40%. This is significantly higher than the breakeven point of 0%, which indicates that short-term investors are, on average, underwater.

According to Bitfinex, the last time short-term bitcoin investors experienced such deep unrealized losses was in 2022, during the bear market that followed the collapse of several major crypto firms, including Three Arrows Capital and FTX.

The analysis concludes that these metrics, together with the technical analysis, indicate a deep bearish sentiment and stress among short-term investors, which usually occurs at local bottoms.