‘Undervalued’ Bitcoin can still hit a new ATH in Q1 2025 – Explained

• Data indicated that BTC is now in an oversold region, which could signal an imminent price rebound
• Total supply in profit revealed that BTC is not yet at the cycle’s low, leaving room for a significant upward move

Market sentiment has been gradually turning bullish. In fact, over the last 24 hours, Bitcoin has gained by 2.57%, pushing its price to approximately $97,500 at press time. However, this price jump is not fully supported by market momentum, with the same falling by 23.23% within the same period.

A broader market analysis based on historical trends underlined the potential for further growth. What this means is that BTC may still have the opportunity to set a new all-time high in the coming weeks.

An ‘undervalued’ position

Data from CryptoQuant’s Market Position and Supply Pressure metrics suggested that Bitcoin (BTC) may be undervalued. This assessment is based on the Margin of Safety (MoS) and Market Sentiment Ratio (MSR) indicators.

The Margin of Safety (MoS) evaluates whether BTC is overvalued or oversold relative to a critical baseline. When the MoS trends above this line, it indicates overvaluation, whereas a position below suggests the asset is undervalued.

At the time of writing, the MoS (represented by the purple cloud) was trending below the baseline, valued near the $90,000-zone (baseline). This implied that BTC is now in an oversold position – A sign that a rally may be coming up next. 

Source: CryptoQuant

Similarly, the Market Sentiment Ratio (MSR) measures the level of optimism or pessimism in the market by comparing its value to the yearly Simple Moving Average (SMA). At the time of writing, it had a reading of at 1.4.

A value above the SMA indicates prevailing optimism, while a value below reflects market pessimism. Press time data revealed that the MSR was below the yearly SMA – A sign of pessimistic sentiment.

Historically, as indicated by green dots on CryptoQuant’s chart, whenever the MoS falls below the baseline and the MSR trends below the yearly SMA, these conditions present a strong buying opportunity. In such cases, BTC has often seen significant rallies on the charts.

The same pattern seems to be forming now in the market – A sign that BTC could be ready for another uptrend.

Far from the market top?

Data from Glassnode’s Total Supply of Bitcoin in Profit, a key metric for identifying BTC’s cyclical tops and bottoms, suggested that Bitcoin is still far from reaching its market top.

According to the same, BTC has not yet touched the red trendline, which historically marks these critical levels.

Source: Glassnode

If BTC touches this red trendline, it would mean that a majority of the holders are in profit. Historically, such scenarios have triggered major market sell-offs. Especially as traders begin to realize profits, exerting downward pressure on the price.

Right now, BTC remains well above this trendline, indicating a favorable position for further rallying as addresses holding this supply are incentivized to continue holding in anticipation of higher gains.

Exchange netflows’ findings

Finally, exchange netflows revealed that there has been a consistent decline in exchange netflow from 12 January – Dropping significantly from approximately 3,431.69 BTC to just 137 BTC.

A sustained decline in netflow means reduced selling pressure, as more investors move their BTC off exchanges into private wallets. This behavior can be interpreted to mean growing conviction among holders.

Source: Cryptoquant

If the exchange netflow turns negative, it would mean that spot traders are increasingly confident – A sentiment that historically correlates with a higher BTC price.

Simply put, BTC remains in a strong position to sustain its upward rally, supported by diminishing selling pressure and increasing market confidence.