Bitcoin recently experienced a significant rally, pushing its value to $116.4k, a move that sparked optimism among investors. However, this bullish momentum was abruptly halted, leading to questions about the cryptocurrency's immediate trajectory and its underlying valuation. An in-depth analysis of market dynamics, including short-term holder behavior and capital flows into exchange-traded funds (ETFs), sheds light on the factors influencing Bitcoin's current position.
Rally Halted by Profit-Taking at Key Resistance
The recent upward push for Bitcoin, which originated from the $107.5k range lows, found its ceiling at the $116.4k mark. This level proved to be a critical short-term resistance and a "magnetic zone" for price action. Crypto analyst Maartun highlighted a significant increase in profit transfers by Short-Term Holders (STH), with 18.7k BTC moved at a profit within 24 hours. This coordinated profit-taking exerted substantial selling pressure, preventing the rally from breaking past the $116k resistance and signaling weak short-term conviction among these holders.
Undervalued? An ETF Flow Perspective
Despite the short-term selling pressure, U.S. Spot Bitcoin ETFs saw a modest inflow of $149.3 million on October 27th, indicating that broader sentiment might not be entirely bearish. This led crypto analyst Axel Adler Jr. to explore a price model that uses ETF capital inflows to determine Bitcoin's "fair value." According to this model, Bitcoin's fair value was calculated at $128.4k. At the time of the analysis, Bitcoin was trading at $114.3k, suggesting it was approximately 11% undervalued compared to the model's prediction based on capital inflows. This divergence presents a compelling argument for Bitcoin potentially trading below its fundamental value, even amid conflicting market signals like resistance and profit-taking.
