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Bloomberg suggests that Bitcoin should be $15,000 according to this adoption metric

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According to the Bloomberg crypto newsletter, a key on-chain indicator suggests that Bitcoin (BTC) is currently greatly undervalued. 

Bitcoin active addresses, the 30-day average. Source: Glassnode.

Bloomberg’s crypto analyst Mike McGlone believes that the recent all-time highs in Bitcoin’s hashrate and more importantly, the 30-day average of active Bitcoin addresses, suggests a $15,000 price level for the asset:

“The Bitcoin hash rate continues to increase and recently reached new highs. Also advancing are addresses used. A top metric for adoption, the 30-day average of Bitcoin addresses is equivalent to the price closer to $15,000 when measured on an autoscale basis since 2017.”

McGlone has remained optimistic about Bitcoin throughout its ups and downs. He says that Bitcoin appears to be a leader in “paradigm shift toward digital money and stores of value” and although he admits that it can still fail, he believes this to be unlikely, concluding:

“Our graphic depicts primary on-chain metrics that would need to reverse for Bitcoin to not keep appreciating in price — the hash rate and active addresses.”

It is true that despite the recent downward momentum, Bitcoin’s on-chain fundamentals have seemingly remained strong, though there is no way of knowing when / if these indicators will lead to a price correction.



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Bad call? Bitfinex bears closed a block of Bitcoin shorts before the drop below $32K

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Bitcoin price is still in a rut, trading near $33,000 and trapped in a downtrend that just seems to get worse with the passing of each day. As the price slumps, analysts have consulted with several technical and on-chain metrics to explain the price collapse, but none of these have picked up on the exact reason. 

One area of interest has been the sharp rise in short positions at Bitfinex in the past week. Traders are placing exaggerated importance on these Bitcoin (BTC) margin shorts as if they are predictors of the current market crash. Still, as Cointelegraph previously reported, analysts forget that Bitcoin margin longs are usually much larger.

On June 18, longs outnumbered Bitfinex shorts by at least 22,800 BTC, but 87% of the short positions were closed before June 22. Currently, margin longs are 43,850 BTC higher than the amount shorted.

While those shorts are usually savvy traders, it is unlikely that they knew in advance that Chinese banks would prevent their clients from engaging in activities involving crypto trading or mining.

More importantly, these bearish positions were built while MicroStrategy was buying $500 million in Bitcoin after a successful senior secured note private offer. To make things worse, Michael Saylor’s business intelligence firm announced the intention to raise another $1 billion by selling stocks to buy Bitcoin.

Let’s take a look at how these courageous shorts fared.

Bitfinex margin shorts (blue) vs. Bitcoin price in USD (orange). Source: TradingView

On June 6, shorts increased from 1,380 to 6,700 at an average price of $36,150. Three days later, another 12,180 shorts were added when Bitcoin was trading at $37,050. Lastly, between June 14 and 15, shorts increased 6,000 to a 25,000 peak while Bitcoin averaged $40,100.

By looking at the Bitcoin prices when those short position increases took place, it is reasonable to assume that the 23,500 contract increase (green circles) had an average price of $37,625.

Related: Traders search for bearish signals after Bitcoin futures enter backwardation

Traders closed positions before BTC crashed bel$32,000

These short positions were steadily closed over the past three days when Bitcoin was already trading below $37,000. However, 17,000 short contracts had already been closed by the time the price plunged below $33,500. Therefore, it is implausible that the average price was below $34,500.

No one would complain about gaining 8%, shorting the market to generate a $73 million profit. However, it is essential to note that on June 16, when Bitcoin reached $40,400, these shorts were underwater by $65 million.

This analysis shows how even highly professional traders can go deep underwater. There’s no way to know if this trade would have been profitable had the crackdown on China not aggravated Bitcoin price or if MicroStrategy managed to raise the $1 billion before the price drop.

If anyone still believes in market manipulation, at least there’s comfort in knowing that pro traders can face drastic losses as well. However, unlike us mortals, whales have deep pockets and patience to withhold even the most rigorous thunderstorms.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.