Bitcoin is in a historically undervalued zone according to CryptoQuant model

Bitcoin (BTC) has reached one of the lowest levels relative to its long-term price trend in history. This was reported by CryptoQuant analyst under the pseudonym Darkfost, noting that such values were observed only in 3.4% of the historical period. The signal appeared amid a decline in BTC quotes, loss of key support levels, and increased negative sentiment among cryptocurrency market participants.

Why Bitcoin is in a Zone of Historical Undervaluation

To assess the value of BTC, Darkfost used the Porkopolis power model with quantile regression, presented on the Checkonchain analytical platform. It compares the actual price of the cryptocurrency with its multi-year trajectory, allowing the determination of the current quotes' position relative to the historical range.

According to the analyst's calculations, the indicator reached a level of 3.4%. This means that only in 3.4% of the historical period was Bitcoin at a comparably low level relative to the model trend. However, this value does not mean that the cryptocurrency is 3.4% below the calculated fair price.

Similar situations were observed in 2015, March 2020, and the end of 2022. In previous market cycles, such periods preceded the recovery of BTC's value, although the duration of the correction and subsequent dynamics varied significantly.

Darkfost believes that historically low model values are of interest for long-term market assessment. However, the analyst allows for further price declines and does not consider the current signal as definitive confirmation of a price bottom formation.

Bitcoin Futures Market Indicates Additional Risks

Amid the decline in BTC, signs of tension have also appeared in the cryptocurrency derivatives market. According to a study by analyst Axel Adler Jr. on November 12, perpetual futures on Bitcoin traded below the spot price for 156 consecutive hours.

In the last day of the considered period, the average futures discount was 0.047%. Simultaneously, open interest increased by 22,000 BTC over the week, reaching 367,400 BTC. The growth in the number of open contracts amid the negative difference between futures and spot prices indicates an increase in position volumes under persistent market pressure.

According to Adler, this combination increases the risk of forced position reductions with leverage. Sharp price movements can lead to liquidations, further enhancing short-term volatility.

Why the Historical Signal Does Not Guarantee BTC Growth

Despite the rarity of current values, the Porkopolis model does not allow for the precise date of correction completion. It is based on statistical patterns of previous market cycles, which may not repeat in the future.

An additional sign of negative sentiment was the decline in the cryptocurrency market's fear and greed index to approximately 20 points out of 100. This indicator corresponds to the zone of extreme fear and reflects the predominance of cautious sentiment among traders.

Thus, the historically low percentile indicates a significant deviation of Bitcoin's price from the long-term model but does not rule out further decline. To assess the market condition, it is necessary to consider not only statistical price models but also demand dynamics, trading activity, and risks in the derivatives market.