Best Bitcoin Fundamental Indicators for Bitcoin Price Analysis

Best Bitcoin Fundamental Indicators for Price Analysis

We list some of the best Bitcoin fundamental indicators for price analysis.

We have collected them from some of the best onchain data providers online, including Glassnoce and TradingView.

There is stock-to-flow, MVRV ratio, stablecoin supply ratio oscillator, Hash ribbon, NUPL, and more. 

Summary: Bitcoin Fundamental Indicators

See the complete list of the 7 best Bitcoin fundamental indicators in the table. Also, there is a column telling you if the indicator shows an undervalued Bitcoin price or overvalued at the publishing time.

What is a Bitcoin Fundamental Indicator?

Bitcoin fundamental indicators are helpful for Bitcoin price analysis.

By looking at several different Bitcoin fundamental indicators it might be possible to get an understanding of if Bitcoin is overvalued or undervalued. 

A good Bitcoin fundamental indicator is:

  1. A set of data that has been correlated to the price in the past
  2. A set of data that is possible to connect to the “intrinsic value” of the Bitcoin network
Examples of number 2 can be data connected to number of users, addresses, mining activity, scarcity etc.

Crypto fundamental analysis VS Equity fundamentals

Traditional fundamental analysts from the stock and equity market generally look to business metrics to figure out what they view to be its actual value.

Common fundamental indicators include earnings per share (how much profit a company makes for each outstanding share) or the price-to-book ratio (how investors value the company versus its book value). 

They might do this for several businesses within a niche, for example, to figure out how their prospective investment stands in relation to others.

What is on-chain metrics?

On-chain metrics can be observed by looking at data provided by the blockchain. Most of the data regarding Bitcoin is public and on-chain. However, there are online services collecting this data into graphs and diagrams for a fee (Glassnode is one example used in this article).

What is Stock-to-Flow Bitcoin Fundamental Indicator?

The Stock-to-Flow (S/F) Ratio is a popular fundamental price model and indicator for Bitcoin implemented by PlanB.

The model assumes that scarcity drives the value of an asset, including Bitcoin.

Definition: Stock to Flow is the Ratio of the current circulating Bitcoin supply and the flow of newly mined Bitcoins.

The price of Bitcoin has historically followed the S/F Ratio. Therefore it is a model that can be used to predict future Bitcoin valuations, or at least how accurate the current price is according to the model.

Colors represent the number of days until the next Bitcoin halving. 

  • Blue: Around 1400 days left until halving
  • Red: 0 days left to halve

MVRV - Market Value/Realized Value Ratio

This graph was taken from TradingView. Read more in our TradingView review.

The MVRV ratio Market value / Realized value ratio is a Bitcoin fundamental price indicator. It is to understand when the Bitcoin price is above or below “fair value” comparing the network value.

MVRV was created by Murad Mahmudov and David Puell while Nic Carter invented Realised Cap and Antoine Le Calvez presented it. Read more about the history and the details of the MVRV ratio.

Realized Cap is an alternative approach to Market Cap as a measure of network valuation.

Definition:  MVRV = Market Cap / Realised Cap

Market cap: Market cap is calculated by taking the last traded price and multiplying it by the coins in circulation.

Realized cap: Realised Cap approximates the value paid for all Bitcoins by summing the market value when they last moved on the blockchain.

Difficulty Ribbon

The Difficulty Ribbon indicator creates a band of different moving averages (MA) of the Bitcoin mining difficulty.

It uses different colors for the moving averages (200d, 128d, 90d, 60d, 40d, 25d, 14d), as shown in the graph above. The metric is the estimated number of hashes for mining a block. 

Historically, periods when the ribbon compresses have been good buying opportunities. Willy Woo created the Difficulty Ribbon. 

Explanation: Bitcoin miners sell some of their mined coins to stay operational.

The weakest miners have to sell more of their coins to remain the production.

When the mining operations become unsustainable, they capitulate (they can’t pay for maintaining the operations anymore). The Bitcoin price is too low to pay for the costs.

At this point, the hashing power and network difficulty reduce and cause ribbon compression.

This pattern usually comes at the end of bear cycles; after miners capitulate, the lack of miner selling pressure allows the price to stabilize and then climb. This is a classic accumulation bottom.

Hash Ribbon

Like the Difficulty Ribbon above, the Hash Ribbon is a market indicator that assumes that Bitcoin tends to reach a bottom when miners capitulate(Bitcoin price is too low to pay for mining expenses).

The Hash Ribbon indicates that the worst of the miner capitulation is over when the 30d MA of the hash rate crosses above the 60d MA (switch from light red to dark red areas).

Historically, this is when price momentum switches from negative to positive. Charles Edwards created this fundamental Bitcoin indicator, and he describes the Hash Ribbon in detail in this blog post.

Stablecoin Supply Ratio Oscillator

The Stablecoin Oscillator introduced by Willy Woo is derived from the Stablecoin Supply Ratio (SSR), and quantifies how the 200d SMA of the SSR moves within the Bollinger Bands BB(200, 2). 

Historically, the stablecoin supply has been high at the Bitcoin price peaks and low close to the price bottoms. As you can see in the graph above, the Stablecoin Oscillator is not as low as it has been during the previous Bitcoin price bottoms, but it’s close to getting there.

Read more about SSR.

Altcoin Season Index

This graph was taken from Tokenmetrics.

The Bitcoin vs. Altcoin Season indicator compares the cumulative returns of altcoins relative to bitcoin to identify whether we are in Bitcoin or Altcoin Season.

Definition: If 75% of the Top 50 coins performed better than Bitcoin over the last season (90 days), it is Altcoin Season. Excluded from the Top 50 are Stablecoins (Tether, DAI…) and asset-backed tokens (WBTC, stETH, cLINK,…)

NUPL - Net Unrealized Profit/Loss

Bitcoin Net unrealized profit-loss NUPL chart from Glassnoce

NUPL (Net Unrealized Profit/Loss) looks at the difference between Unrealized Profit and Unrealized Loss to determine whether the network is currently in a state of profit or loss.

Unrealized profit means that there are Bitcoin addresses holding Bitcoin in profit (bought for less than the current market price).

Unrealized loss means that Bitcoin addresses hold the Bitcoin they acquired for a higher price than the current market price.

The different colours represent the status of the network

  • Red: Capitulation
  • Orange: Hope-Fear
  • Yellow: Optimism – Anxiety
  • Gree: Belief – Denial
  • Blue: Euphoria – Greed
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