- Bitcoin has a strong thermocap ratio that underlines strong investments in the network.
- The transaction volume and unrealized profit metrics suggested Bitcoin’s overvaluation and potential correction, respectively.
Bitcoin [BTC] posted strong gains in the hours before press time, with a 3% gain in the past 24 hours. It was trading at $71.1k at the time of writing, but is facing resistance in the $71.4k zone. The lack of trading volume recently meant that there was a chance of a new range formation.
While the price action on the lower timeframes did not show a bullish spark, the higher timeframes were still very bullish. A range of statistics showed that Bitcoin has strong network fundamentals, but there are also questions about whether BTC may be overvalued.
Investments in the Bitcoin network have remained strong
In a message on X (formerly Twitter), CEO of CryptoQuant Ki Young Ju stated that Bitcoin was not overvalued based on network fundamentals. The Thermo cap The metric was high, indicating strong network fundamentals.
The Thermo Cap metric is the cumulative value of all Bitcoin mined to date. It therefore represents the total investment costs in the network. The Thermo Cap ratio divides Bitcoin’s market cap by the Thermo Cap.
The trend has been steadily rising over the past eight months, but has not come close to previous cycle highs. Consequently, it is likely that current Bitcoin prices may not be the end of the bull run.
Is it time for you to book profits on your investments?
The net unrealized gain/loss metric was above 0.5, which usually occurs during a bull run. It is the ratio of the number of investors to profits, and with so many holders in the money, this showed that holders have good reasons to book profits.
A value above +0.7 usually occurs around the cycle top. Although Bitcoin is not there yet, there is a chance of a sharp correction. Every bull run in the past has had sharp retracements of 20% or more, followed by a quick recovery.
The network value for transactions is the market capitalization divided by the volume traded. The 30-day moving average has moved higher in recent months.
It was a signal that compared to the network’s ability to conduct BTC transactions, it is overvalued. This doesn’t necessarily mean we’ll see a correction.
Read Bitcoin’s [BTC] Price forecast 2024-25
In recent years, with Michael Saylor and MicroStrategy as prominent examples, Bitcoin has been seen as an inflation hedge and as a transaction network.
The rising NVT ratio could reinforce this idea, rather than showing that BTC is overvalued.