Bitcoin Valuation Analysis by Alphractal

Cryptocurrency analytics firm Alphractal has examined the current valuation of Bitcoin using the Short-Term Flow Fair Value metric, clarifying whether BTC is currently cheap or expensive in the market.

Short-Term Flow Fair Value Metric

The Short-Term Flow Fair Value metric measures the relationship between new Bitcoin issuance and its market absorption. It considers:

• BTC inflows and outflows on exchanges impacting trading liquidity.
• Miner supply, as miners frequently sell BTC to cover operational expenses.
• Transaction fees, which influence supply and demand dynamics.

A high Short-Term Flow Fair Value indicates that more BTC is being absorbed by the market, reducing selling pressure and potentially supporting the price. Conversely, a drop suggests that more coins are entering the market through exchanges and miner sales, increasing selling pressure.

Alphractal notes that the metric reached an all-time high in February but has recently started to fall. However, it remains high, indicating strong Bitcoin absorption levels despite the recent pullback.

Aggregate Funding Rate

In addition to the Short-Term Flow Fair Value, Alphractal also examines the Aggregate Funding Rate across exchanges, which is currently approaching negative territory while remaining positive overall. Historical trends show that negative funding rates across major exchanges are often linked with local market bottoms, suggesting a potential shift in market sentiment is imminent.

> Disclaimer: This is not investment advice.