Is the Current Bitcoin Price Cheap or Expensive? Analysis Company Shared Its Special Metric!

Cryptocurrency analysis firm Alphractal examined the current valuation of Bitcoin using the Short Term Fair Value Flow metric and clarified whether BTC is cheap or expensive under current market conditions.

Short-Term Flow Fair Value metric measures the relationship between the issuance of new Bitcoin and its absorption by the market. It takes into account the following:

• BTC inflows and outflows on exchanges affecting trading liquidity.
• Miners often sell BTC to cover operational expenses, hence miner supply.
• Transaction fees that play a role in supply and demand dynamics.

A high Short-Term Flow Fair Value indicates that more BTC is being absorbed by the market, reducing selling pressure and potentially supporting the price. Conversely, a decrease in this metric indicates that more coins are entering the market through exchanges and miner sales, increasing selling pressure.

Alphractal indicates that the metric reached an all-time high in February but has started to decline recently. However, the high absorption levels of Bitcoin continue to remain strong despite the recent pullback.

In addition to Alphractal, Short-Term Flow Fair Value, exchanges also pay attention to the Total Funding Rate across the board. It is currently approaching the negative zone but generally staying positive. The negative funding rate on major exchanges is historically associated with local bottoms, indicating a potential shift in market sentiment on the horizon.