Bitcoin has fallen into a liquidity storm that carried it to $35,000. Jurrien Timmer, Fidelity Investments’ director of macroeconomic research, believes that at current levels digital gold could form a bottom.
It has been a bad trip for crypto. The GS Bitcoin-sensitive equity basket already took out its 2021 lows—not a great sign. I thought $40k would be a bottom, based on my demand model and on-chain dynamics (via the dormancy flow indicator), but here we are at $35k. 🧵 pic.twitter.com/jZbiP4azZc
— Jurrien Timmer (@TimmerFidelity) January 25, 2022
He backed his view with a demand model and the Bitcoin Dormancy Flow indicator.
In his view, prices have reached fundamentally justified levels. There have been occasions when the price fell below the signal line. However, the further the deviation, the greater the undervaluation of digital gold, the expert explained.
The bitcoin-to-gold ratio moved 1.5 standard deviations away from the trend line and reached a support level. This also points to relative oversold conditions for bitcoin.
On the short-term momentum chart, a bullish divergence has formed.
In conclusion, Timmer noted that, unlike unprofitable tech stocks, bitcoin has a fundamental base that is likely to become more attractive over time. The strategist added that this year it will matter more for digital-asset investors than ever.
Earlier, analysts at ARK Invest forecasted bitcoin to reach $1.36 million by 2030.
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