Bitcoin Trades 10% Below Fair Value Amidst ETF Developments
- Bitcoin BTC -2.90% trades 10% below its ETF-implied fair value.
- Institutional ETF inflows contribute to current market dynamics.
- Potential price recovery predicted due to ongoing ETF demand.
Bitcoin is currently trading well below its fair value, estimated from ETF flows and Nasdaq 100 correlations, raising concerns among institutional investors and traders.
This valuation gap highlights implications for market dynamics, particularly with ongoing institutional ETF inflows and regulatory clarity, potentially impacting related assets like Ethereum ETH -4.43% .
Bitcoin is currently priced 10% below its fair value implied by ETF flows, sitting around $108K. The fair value estimates based on ETF models and Nasdaq correlations place it closer to $156,000.
Spot Bitcoin ETFs have introduced significant institutional inflows with issuers like BlackRock and VanEck actively involved. Matthew Sigel from VanEck regularly analyzes Bitcoin’s on-chain and ETF dynamics.
The undervaluation is attributed to institutional ETF flows, regulatory clarity, and macroeconomic factors. ETF inflows have added billions, described as price-insensitive due to their nature.
Bitcoin’s recent pullback is deemed a liquidity-driven mid-cycle reset. This has led to normalizing leverage and an increase in on-chain activity, supporting further price adjustments.
“Bitcoin’s October pullback reflects a liquidity-driven mid-cycle reset. Leverage has normalized, on-chain activity is rising.” — Matthew Sigel, Head of Digital Assets Research, VanEck
Historical data shows major valuation gaps typically precede price rallies. Peter Brandt forecasts Bitcoin to possibly hit $200,000 by 2025, supported by strong ETF demand.
“I initially forecasted bitcoin at $120,000, but now my view is $120,000-$200,000 by September 2025.” — Peter Brandt, Trader & Analyst
Experts indicate a supply squeeze due to sustained institutional holdings and increased ETF-driven demand. Regulatory clarity by entities like the U.S. SEC has been favorable, enhancing market stability and facilitating further institutional engagement.
