The outlook across the cryptocurrency ecosystem continues to dim as the sharp downtrend that was initially sparked by the collapse of Terra (LUNA, now LUNC) appears to have claimed the Singapore-based crypto venture capital firm Three Arrows Capital (3AC) as its next victim. 

As large crypto projects and investment firms begin to collapse on a weekly basis, the prospect of a long, drawn out bear market is a reality investors are beginning to accept. 

Based on a recent Twitter poll conducted by market analyst and pseudonymous Twitter user Plan C,  41.6% of respondents indicated that they thought the Bitcoin 

BTC

$17,228

 bottom will fall between the $17,000 to $20,000 range.

Addresses holding at least 1 BTC hits a new high

In the midst of the heightened volatility and rapid price decline for Bitcoin, many would expect to see traders dumping their holdings and fleeing to the sidelines in a bid to maintain their purchasing power.

While it has indeed been the case that falling prices and liquidations have pushed many traders out of the market, low-priced Bitcoin has also attracted some buyers who have patiently been waiting for the right entry point.

Data shows that the number of Bitcoin addresses that hold at least 1BTC has now hit a new all-time high and it appears that it will increase in the near future if sub-$20,000 BTC continues to attract buyers.

Related: Is the bottom in? Raoul Pal, Scaramucci load up, Novogratz and Hayes weigh in

“BTC is cheaper than it looks”

Market tops and bottoms are usually overreactions to developments and retail traders have a tendency to FOMO when the price is rising, yet they are quick to sell when bad news starts to spread.

A more nuanced analysis of the current value of Bitcoin was discussed by Jurrien Timmer, director of global macro at Fidelity, who posted the following chart and questioned if “BTC is cheaper than it looks?”

Timmer said,

“If we consider a simple “P/E” metric for BTC to be the price/network ratio, then that ratio is back to 2017 and 2013 levels, even though BTC, itself, is only back to late 2020 levels. Valuation often is more important than price.”

Timmer added that BTC is currently priced below its fair market value with the Bitcoin dormancy flow indicator, which shows “how technically oversold [it] is.”

Timmer said,

“Glassnode’s dormancy flow indicator is now to levels not seen since 2011.”

Taken together, the rise in Bitcoin addresses holding more than 1 BTC combined with the asset's historically oversold price and undervalued price/network ratio suggests that the downside possibility may not be as bad as many traders think.

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