Bitcoin (BTC) recently slipped below $71,000, erasing all the gains made since the U.S. presidential election in late 2024.
However, one analyst argues that the asset is trading at a 41% discount to its long-term historical trend value.
Market Stress and a Growing Valuation Gap
Using a power-law valuation model, market observer David placed Bitcoin’s fair value at $122,762, compared with spot prices around $72,000 at the time. That implied a gap of roughly $51,000, or about 41%, which he described as well below Bitcoin’s normal historical range.
David’s analysis focused on the mechanics behind the move rather than macro headlines. He said current price action appears to be driven mainly by forced flows in derivatives markets, such as hedging and liquidation-related selling, rather than long-term holders distributing their BTC.
One metric he highlighted was Bitcoin’s z-score, a measure of how far the current price varies from the trend, which he estimated at minus 0.76, suggesting the price has moved far below its typical deviation from the long-term trend.
Positioning data reinforced that view, considering that over the past 30 days, Bitcoin’s price is down approximately 20%, while open interest has risen nearly 7%, according to figures cited in the post.
David described these trends as a sign that leveraged exposure is increasing even with the price weakening. In his words, price is falling while leveraged bets are growing, a setup that can lead to sharp, forced moves in either direction.
He also pointed to elevated volatility, with 20-day implied volatility above 43, and combined futures and options open interest of more than $2.3 billion. Under those conditions, the analyst estimated a 70% probability of a squeeze if the price begins to move higher, noting that positioning could “flip very fast.”
Furthermore, he identified the area near $73,000 as a key gamma level, where moves below it may amplify volatility, while moves above it could dampen price swings.
Price Action Reflects Leverage
At the time of writing, the flagship cryptocurrency was trading around the $70,500 level, according to CoinGecko, marking a nearly 8% drop in the last 24 hours and a close to 20% dip over seven days. In the past month, BTC is down almost 25%, with the losses pushing it 44% below its all-time high from October last year.
This decline triggered a wave of liquidations that hit the market, with data from analytic firm CoinGlass showing that more than 154,000 traders were liquidated in 24 hours, with total losses near $718 million.
Another entity that has been significantly affected by BTC’s recent dip is Strategy, which recently purchased 855 BTC for $75.3 million. According to the Kobeissi Letter, the firm’s Bitcoin position has moved deeper into the red, with paper losses rising to $40 billion in the last four months.
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