Bitcoin’s (BTC) recent slide to a fresh cycle low, briefly dipping below $60,000, has renewed debate over whether the asset is once again undervalued.
Grayscale Research finds that, based on several on-chain metrics, Bitcoin currently looks cheap. However, the firm cautions that present conditions are not as extreme as prior bear market troughs—particularly the period following FTX’s collapse, when intense selling pressure hit crypto markets.
Two Key Catalysts
Bitcoin’s price remains well under its long-term average, as shown by Grayscale’s composite on-chain valuation indicator, which combines a weighted average of three distinct measures. Still, the firm notes the present bear market could be shallower than previous cycles, since the prior bull run itself was relatively muted.
Grayscale points out that the crypto ecosystem is structurally stronger now than in past cycles. Broader access to exchange-traded products, wider integration of crypto into wealth management platforms, and growing institutional participation all support a more resilient market. These factors may help limit the severity of the current downturn compared with earlier bear markets.
Looking forward, Grayscale highlights two short-term catalysts investors should monitor closely. The first is legislative progress on the CLARITY Act in the U.S. Senate; the second is whether leveraged Bitcoin holders can shore up their positions and stabilize balance sheets. While Grayscale expresses cautious optimism about the CLARITY Act, prediction markets still indicate an uncertain outcome.
Even though it’s unclear whether Bitcoin has already hit its bottom, Grayscale argues current levels could represent a buying opportunity for long-term investors—especially those using dollar-cost averaging. Tactical traders, however, may prefer to wait for greater clarity on regulatory developments before committing capital.
Capitulation Risk Remains
Fidelity Digital Assets reports that Bitcoin has remained in a “death cross” for more than 200 days, and the price briefly fell below the 200-week moving average over the weekend. Fidelity notes that past breaches of this long-term support have often coincided with forced selling events, including during the 2022 market collapse.
Analytics firm Swissblock points to its Risk Index and spot BTC ETF net flows as clear early signals of whether the market is stabilizing. According to Swissblock, the Risk Index typically declines once selling pressure eases and ETF accumulation returns, suggesting the market is starting to absorb fresh sell-offs.
Despite those signs, Swissblock warns that Bitcoin remains under structural pressure while its Risk Index sits in what the firm terms the “Capitulation Risk” zone. In short, some metrics show potential stabilization, but downside risks persist until selling pressure meaningfully retreats and clearer bullish signals emerge.