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Bitcoin BCMI Drops Into Historic Undervaluation Zone: Is a Major Pivot Forming?

After a strong week, Bitcoin (BTC) is trading just above $75,000, as risk assets moved higher on hopes the US may reach a deal with Iran.

Against the backdrop of a much-anticipated respite, new data revealed that the asset is currently testing a “major historical pivot zone.”

“Value-Accumulation Zone”

Bitcoin’s Combined Market Index (BCMI) is nearing an important historical support level after plunging into the 0.2-0.3 range. This area has previously defined periods when the leading crypto asset was significantly undervalued, even though it does not point to an instant rebound, according to the latest report by CryptoQuant.

The index, which combines multiple on-chain and sentiment indicators such as MVRV, NUPL, SOPR, and Fear & Greed, shows that the recent correction has brought both market valuation and investor mood back to levels last seen in early 2023.

At the same time, the 90-day moving average continues to trend lower, which essentially indicates that downward pressure has not fully eased. A CryptoQuant analyst suggests waiting for this trend to stabilize before confirming that selling activity has run its course.

Current data points to reduced downside risk relative to potential long-term gains. As a result, the market appears to be entering a “value-accumulation” phase.

Meanwhile, analyst Ali Martinez said most Bitcoin traders are now betting to the upside. In his recent update, he noted that the latest leg up triggered a liquidation of almost $80 million in short positions.

With those shorts cleared, the market is beginning to lean long as traders chase the rally. The analyst pointed out that “biggest” clusters of long positions are now located at $70,000, $65,000, and $57,000. These levels, he said, could act as liquidity magnets, and potentially flush out late leverage and reset the market before the next relief rally.

“Max Pain” Ahead?

Some analysts expect a more pronounced correction. An early BTC advocate, Davinci Jeremie, for one, warned that despite the recent recovery, the market may not have reached its cycle bottom yet.

He highlighted similarities between the recent drop below $60,000 and the decline seen in June 2022. According to him, the “max pain” is still ahead, as well as the possibility of another capitulation event before the asset finds its lowest level. He compared this potential scenario to the FTX collapse, which triggered massive liquidations and briefly pushed Bitcoin below $16,000 at the time.

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