Bitcoin Undervalued? Realized Supply Ratio Says So
A key chart shows Bitcoin may be undervalued, signaling a potential market bottom or trend shift.
- Bitcoin’s price vs. realized supply indicates undervaluation
- SMA-30D drops below trend line often signal local bottoms
- Past signals marked major rebounds after market stress
What Is the Bitcoin Realized Supply Ratio?
A powerful chart has caught the attention of analysts, showing the relationship between Bitcoin’s price and its realized supply—a metric that often reveals when BTC is undervalued. This ratio, especially when smoothed over a 30-day moving average (SMA-30D), offers insight into market sentiment and valuation.
In the current chart, the purple SMA-30D line tracks this ratio. When it drops below a key lower threshold (the dotted line), it historically signals one of two things:
- A local correction bottom in a bull market.
- The start of a bear market.
Either way, it marks a moment when Bitcoin is likely undervalued.
Historical Signals Hint at Recovery
Looking back, this same ratio dipped below the threshold during two critical points in recent history:
- After the COVID-19 market crash
- Following the China mining ban
In both instances, these dips marked strong rebound points for Bitcoin. The market eventually rallied from those lows, confirming that the signal was a useful indicator—not a perfect model, but a meaningful one.
The chart doesn’t guarantee a bounce, but if history rhymes, Bitcoin could be nearing a turning point once again.
Undervalued or Turning Point?
With the Bitcoin realized supply ratio once again dipping below the dotted line, some analysts believe this could represent a prime accumulation zone. While caution is always warranted, indicators like this can guide smarter decision-making.
As the saying goes, “All models are wrong, but some are useful.” This one might be worth watching.
