BTC is “cheaper than it appears,” Fidelity’s Jurrien Timmer

Bitcoin’s (BTC) value has been volatile lately, with the cryptocurrency dropping to near $20,000 on Wednesday. Before rebounding above $21K amid broader market volatility as a result of the US Federal Reserve’s 0.75 percent rate increase.

The cryptocurrency had dipped below $19,500 early in the US session but found some support and pared those losses.

At the time of writing, BTC was changing hands at $20,879 on Bitstamp, having hit an intraday high of $21,200 earlier today. The digital currency is down nearly 4 percent on a 24-hour basis.

Ethereum, as well as other cryptocurrencies, had a good day. Overall, nevertheless, the crypto market is in a bearish trend and more price decline seems likely in the short term.

As for Bitcoin, analysts remain divided on where the digital currency is headed in the near term. Fidelity Investments‘ Jurrien Timmer says BTC is “cheaper than it appears” after the recent sell-off.

Fidelity’s Jurrien Timmer on BTC value

According to Fidelity Investments’ Director of Global Macro, Jurrien Timmer, BTC may be currently underpriced. He explains:

“I think the market is underestimating how big this could be, and as a result. I think Bitcoin is cheaper than it appears right now.”

Timmer’s remarks come after BTC’s price tumbled below $9,000 yesterday. The crypto is down nearly 4 percent in the last 24 hours.

Based on on-chain data metrics, he asserts:

“Is BTC cheaper than it looks? If we consider a simple “P/E” metric for BTC to be the price/network ratio, then that ratio is back to 2017 and 2013 levels, even though BTC itself is only back to late 2020 levels. Valuation often is more important than price.”

In the stock market, a price to earnings (P/E) ratio – in Bitcoin’s case. A price/network ratio – is used by analysts to estimate a company’s worth.

A high number indicates that the asset is overvalued, while a low value suggests that the asset is undervalued.

The chart below shows this is the case for Bitcoin.

Bitcoin: Price vs. Value chart. Source: Jurrien Timmer on Twitter.

The demand curve for bitcoin

Timmer looked at Bitcoin’s price versus the non-zero addresses as well. According to him, the BTC price has fallen below the network curve to indicate greater growth potential.

As it has historically reversed upward above the curve to establish a new high.

“In other words, BTC is currently cheaper than it appears based on the number of non-zero addresses. The current move below suggests more upside as the price has historically corrected back above,” he says.

Bitcoin’s demand curve chart. Source: Jurrien Timmer on Twitter

 The dormancy flow of Bitcoin

The dormancy flow is the third on-chain statistic evaluated by the Fidelity macro analyst.

This is a metric that simply examines how long Bitcoin coins remain unmoved on the blockchain. It’s an excellent indicator of whether or not the coin has been oversold.

This is a leading indicator of capitulation which, so far, has been notably absent as prices have declined. A move below the red line (dormancy flow) would suggest capitulation has started,” says Timmer.

The longer Bitcoin investors hold on to their coins. The harder it becomes for them to sell as they become emotionally attached” to their investment.

“Glassnode’s dormancy flow indicator has now dropped to levels not seen since 2011,” Timmer adds.

Bitcoin network curve showing dormancy flow.

Bitcoin was trading at $21,800 on Wednesday evening, around 30% lower than its all-time high of $69,000 in 2021. The price of the benchmark cryptocurrency is down 68.8 percent from its all-time high of $69K hit in 2021.

In the short term, Bitcoin is “still in a bubble,” but its price is “cheaper than it appears.” When compared to gold, says Jurrien Timmer, director of global macro at Fidelity Investments.