Key Takeaways:
Grayscale Research's composite on-chain indicator shows Bitcoin trading below its long-term average valuation after the asset's drop to $60,000, suggesting the selloff may have overshot fundamental fair value.
Bitcoin stabilized near $62,500 as of 12:00 UTC on June 10, recovering from a low of $59,107 on June 4, after Grayscale Research published analysis showing its composite on-chain valuation metric places the asset below its long-term average for the first time since the 2022 bear market.
"The composite on-chain indicator, which weights metrics including realized price, MVRV ratio, and spent output profit ratio, suggests Bitcoin is trading at a discount to its on-chain fundamental value," Grayscale Research said in a note published June 10.
The indicator's reading comes as 10.46 million Bitcoin — more than half the circulating supply — are held at a loss, according to Glassnode data cited by crypto analyst Ali Martinez. Bitcoin's 14-day Relative Strength Index touched 14.70 on June 6, the lowest reading on record, while the asset tested its 200-week simple moving average near $61,880, a level that marked cycle bottoms in 2020, 2018, and 2015.
The Grayscale analysis carries weight because it represents the first major institutional endorsement of Bitcoin as undervalued at current levels, potentially establishing a price floor near $60,000. The next resistance sits at $65,000, with a break above that level opening a path toward $68,500, while a failure to hold $61,200 could trigger a retest of the $59,000 zone.
$2 Billion in Liquidations Reshape Positioning
The selloff that drove Bitcoin below $60,000 triggered more than $2 billion in forced closures across centralized exchanges, with futures markets seeing $800 million in liquidations within 24 hours on June 4, Coinglass data shows. Spot ETF outflows accelerated the decline, with products from BlackRock's IBIT, Fidelity's FBTC, and Grayscale's GBTC recording combined outflows exceeding $2 billion in late May and early June.
When ETF holders redeem shares, issuers must sell the underlying Bitcoin to meet obligations, creating mechanical selling pressure that spot markets struggled to absorb. The outflows signal a near-term shift in institutional positioning, though Grayscale's valuation analysis may encourage a reversal if buyers view current levels as an entry opportunity.
Strategy's Symbolic Sale Rattles Confidence
The psychological damage from Strategy's first Bitcoin sale in nearly four years compounded the selling pressure. Michael Saylor's company sold 32 Bitcoin for approximately $2.5 million at an average price of $77,135 between May 26 and May 31, according to company disclosures. While the amount represents a fraction of Strategy's 500,000-plus Bitcoin treasury, the symbolic breach of the company's never-sell policy triggered a 3.1% drop in Bitcoin to $65,391 within hours of the announcement.
Saylor has indicated additional sales are "not unlikely" before year-end to fund operations and potential dividend payments, though he framed each sale as enabling the purchase of roughly 20 new Bitcoin through the company's preferred stock offerings.
Mining Economics Approach Breakeven
Current price levels are approaching the all-in production costs for many mining operations, particularly those using older hardware or paying elevated electricity rates. With approximately 450 new Bitcoin created daily through mining rewards — representing roughly $28 million in daily selling pressure at current prices — miners becoming reluctant sellers could remove a significant supply overhang. Mining difficulty adjustments historically follow such conditions, making operations more profitable for remaining participants and establishing a supply-side floor near current levels.
This article is for informational purposes only and does not constitute investment advice.
