Following a significant drop in early August, Bitcoin [BTC] has struggled to make a strong recovery. In fact, the brief rally to $65k after the sell-off was quickly reversed, highlighting caution among investors and traders.
Nevertheless, despite the recent decline to $52.5k, there is a possibility that BTC could be approaching a local low. Analyst Marty Party believes that the increasing Bitfinex long positions could signal a potential bottom for Bitcoin.
“Bitfinex Longs continue to grow – historically, this predicts the bottom of #Bitcoin more than any other indicator.”
Is it Wise to Seize the Opportunity?
According to Marty Party, the rise in Bitfinex’s BTC longs starting from August 28th indicates a potential rebound for the cryptocurrency.
An examination of Bitfinex’s BTC long positions and price by CryptoCrypto displayed positive correlations with recent market lows.
Looking at the data provided, BTC’s lows in April and July aligned with a notable increase in long positions on the Bitfinex exchange. On average, BTC hit a low approximately 15 days after the rise in long positions. Whether September will follow a similar pattern remains to be observed.
It is important to note, however, that correlations do not imply causation. Various other factors, such as macroeconomic developments or updates in the crypto industry, could also impact BTC’s recovery.
Despite this, the Mayer Multiple suggests that BTC’s current price levels might be undervalued, offering traders a promising buying opportunity.
For those unfamiliar, the Mayer Multiple compares BTC’s price to its 200-day Moving Average, providing insight into its valuation relative to historical trends.
A Mayer Multiple below 2.4 historically indicates undervaluation and attractive buying prospects. A value exceeding 2.4 signals an overheated market.
Notably, values under 1 (green) corresponded with local lows in July and early August. A similar signal was observed in late August alongside the rise in Bitfinex longs, indicating that BTC could be significantly undervalued at its current price levels.
In addition, the high level of fear in the market, evidenced by a reading of 23 on the Crypto Greed and Fear Index, serves as another indicator to consider buying BTC at a discount.