What If Bitcoin Is Being Undervalued? Santiment's Correlation Analysis Suggests It Could Be

The Case for Underpricing

According to on-chain analytics firm Santiment, Bitcoin arguably presents an intriguing mismatch when compared to traditional markets over the past four years. The firm’s research highlights a notable divergence in how BTC has moved relative to two major assets: Gold and the S&P 500.

Looking at recent performance since August 11th tells part of the story. While Gold has surged 21% and the S&P 500 climbed 7%, Bitcoin went the opposite direction, declining approximately 15% in the same period. This breakdown in historical correlation patterns leads Santiment to conclude that the leading cryptocurrency may be undervalued relative to its historical relationship with these traditional assets.

Understanding Asset Correlation and What It Means

When two assets show correlation, their price movements tend to follow patterns—when one rises, the other often does too. Bitcoin had demonstrated consistent correlations with both Gold and the S&P 500 over the four-year span. However, the recent divergence suggests this relationship has shifted, potentially pointing to a valuation imbalance that markets may eventually correct.

On-Chain Price Levels as Possible Anchors

Glassnode’s Supply Quantiles Cost Basis Model offers another lens for examining Bitcoin’s price structure. This model identifies key price levels based on the percentage of BTC holders sitting in profit at different price points.

Bitcoin’s recent action around the 0.85 quantile level—currently at $108,500—presents an important technical reference point. Above this sits the 0.95 quantile, which BTC breached during its rally to the all-time high of $126.08K. At that peak, over 95% of circulating supply held unrealized gains. The subsequent pullback brought price below both thresholds, making the 0.85 level a potential resistance that could test upside attempts.

On the downside, support potential exists around the 0.75 quantile near $100,600. “Historically, these quantile levels have functioned as both support and resistance zones,” Glassnode noted. “A decisive break of either level would likely set the direction for the next major trend.”

Current Market Position

Bitcoin is currently trading around $95.63K, having gained 4.73% over the past seven days. The asset continues to trade between these quantile-based technical levels, with market participants watching whether it can reclaim resistance or if lower support will be tested next.