Bitcoin's recent decline has pushed on-chain valuation metrics into undervalued territory, though the asset remains more expensive than at prior cycle bottoms, according to Grayscale Research. Head of Research Zach Pandl stated on June 9 that a composite valuation model combining three separate on-chain measures indicates Bitcoin is now trading below its long-term fair value after falling to a new cycle low.

Valuation Signals and Market Maturity

While the metrics suggest undervaluation relative to historical averages, the signal is not as extreme as levels seen during major market capitulation events, such as the collapse of crypto exchange FTX in 2022. Grayscale attributes this moderation to a less severe preceding bull cycle and structural improvements across the asset class. These improvements include the expansion of exchange-traded products, broader deployment across wealth management platforms, and increasing institutional adoption.

Key Catalysts for Recovery

Determining whether the market has found a definitive bottom depends on two near-term factors. The first is progress on the CLARITY Act, proposed legislation aimed at establishing a clearer regulatory framework for digital assets in the U.S. While Grayscale remains optimistic about the bill's prospects, prediction markets indicate the outcome remains uncertain. The second factor involves highly leveraged Bitcoin holders and whether they can successfully stabilize their balance sheets during the ongoing downturn. Pandl suggested that dollar-cost averaging may make sense for long-term investors seeking exposure at discounted valuations.

Bitcoin trades below $61,000 on Wednesday morning, having declined approximately 9% over the past week. According to crypto analyst Kevin, the cryptocurrency is expected to establish its final bottom between July and October. He identified the $44,000-$56,000 range as the most likely area for this low to form, citing the 0.5 Fibonacci retracement level and the "golden pocket" zone as key support indicators.

Market Cycle Analysis

In a June 9 market update, Kevin stated that the Bitcoin roadmap continues to play out as expected. He highlighted several previous calls that have materialized, including a January countertrend rally, a short opportunity near $97,000 after key moving averages were lost, and a spring relief rally. The market is now entering the final stage of the cycle, characterized by summer weakness and the formation of the true bear market low.

Technical Indicators and Support Levels

Kevin pointed to a high-confluence support region created by the combination of Fibonacci levels and historical trading ranges. Bitcoin has historically spent significant time trading in the mid-$40,000 to mid-$50,000 range during previous market cycles. Additionally, the breakdown from a bear flag pattern suggests a measured move target of approximately $47,500, which falls within the broader support zone.

Liquidity and Momentum

Bitcoin's liquidity profile supports the bearish outlook, with a large concentration of liquidity identified between $62,000 and $44,000. Kevin argued that market makers are likely to continue pushing the price into this area. Despite growing bearish sentiment, long-term indicators such as monthly momentum metrics, money flow, and whale accumulation data have not fully reset. The Relative Strength Index (RSI) remains in a phase historically associated with prolonged consolidation and weak price action, while institutional accumulation has not yet returned fully.