Bitcoin Rises to $59,000 But Remains in Low Valuation Zone

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Bitcoin is currently trading at $59,300, with a slight increase of around 4% since hitting a low of $57,000 over the past 24 hours. Bitfinex analysts predict that after the halving event, Bitcoin will continue to strengthen its price position, while other cryptocurrencies are attracting interest from investors thanks to their potential to bring value return higher profits.

Bitcoin is undervalued

The latest market report from Bitfinex states that Bitcoin is undervalued, with the Market Value to Realized Value (MVRV) index currently reaching 2.21. This is seen as a potential opportunity for investors as historical data shows there are significant profits when MVRV falls below the 90-day average. However, Bitcoin’s dominance is fading as Ethereum and other cryptocurrencies are gaining ground.

This change in investment patterns is the result of a recent federal economic report highlighting slower-than-expected growth for the U.S economy. The annual real GDP growth rate slowed to 1.6% in the first quarter of 2024, down from 3.4% in the final quarter of 2023. This has prompted investors to look for alternative currency with higher profit potential.

Important macroeconomic factors

Macroeconomic factors are influencing Bitcoin’s performance according to Bitfinex, with slowing US economic growth assessed as being due to microeconomic factors, such as rising interest rates that are discouraging investors. Avoid investing in assets like Bitcoin, which are volatile. The Fed’s main inflation measure, the personal consumption expenditures index (PCE), was flat in March, remaining steady at a 0.3% increase from the previous month. On a yearly basis, PCE reached 2.7%, exceeding the Fed’s 2% inflation standard and exceeding consensus forecasts.

The Bitfinex report also highlights the shift towards altcoins, demonstrated by the recent decline in inflows into Bitcoin ETFs in the United States. After the US Securities Exchange Commission (SEC) approved Bitcoin ETFs in January, these funds received widespread attention, with around $12 billion invested. However, this capital flow declined in April, leading to a shift in investor focus to altcoins.

In short, although Bitcoin’s price consolidation may continue for up to two months after the halving, the cryptocurrency’s dominance is fading. This, coupled with slower U.S. economic growth and reduced inflows into Bitcoin ETFs, is pushing investors to focus on altcoins in search of higher potential returns.