Bitcoin's Stagnation: Overvalued or Overhyped?
1min read Bitcoin's recent performance has been lackluster, with prices hovering just above $98,000 despite attempts to break above the $100,000 mark. CryptoQuant, a cryptocurrency analytics firm, has suggested that bitcoin's fair value lies between $48,000 and $95,000, indicating that the current market price may be overvalued. The firm's Bitcoin Network Activity Index has also plummeted by 15% from its peak in November, driven by a significant drop in daily transactions.
Market sentiment has been dampened by the slow progress of the Trump administration in establishing a proposed BTC strategic reserve. Eric Trump's recent endorsement of bitcoin investments through the family-affiliated World Liberty Financial has not been enough to catalyze any significant upward movement in the cryptocurrency's price.
In contrast, gold has been surging, with a year-to-date increase of over 9% to reach a record high of $2,882 per ounce. The yellow metal is on track for its sixth consecutive weekly gain, driven by its enduring appeal as a store of value and hedge against uncertainty. UBS notes that gold's rise is drawing investors away from the tepid performance of bitcoin.
As the market awaits the release of the U.S. jobs report on Friday, traders are expecting a slowdown in job additions to 170,000 from December's 256,000. The unemployment rate is expected to remain stable at 4.1%, with average hourly earnings anticipated to rise by 0.3% month-on-month. A big miss on expectations could see traders reconsider the possibility of faster Fed rate cuts, sending the 10-year Treasury yield lower and spurring demand for riskier assets like stocks and bitcoin. However, strong data could lead to risk aversion, complicating matters for the Fed.
