bitcoin It briefly fell below its network value under Metcalfe’s value model for the first time in nearly two years, according to network economist Timothy Peterson.
This is usually a signal that often marks the later stages of market resets, he said.
“While this does not necessarily indicate that a bottom has been reached, it does indicate that most of the leverage has been removed and the ‘bubble’ has deflated,” Peterson said.
Metcalfe Value estimates the fundamental value of a network using activity and user-based growth, and has historically provided useful context during major cycle changes.
The drop below the network’s value coincided with the steepest pullback of bitcoin’s cycle, a drop of around 36% that pushed the price to around $80,000. That move depleted leverage and unwound speculative excess, setting the stage for a strong rally. Bitcoin has since recovered above $90,000 as buyers stepped in and network conditions stabilized.
During the 2022 bear market, bitcoin spent the entire period trading below its Metcalfe value as activity and sentiment weakened. Since the new cycle began in early 2023, the price had remained consistently above this benchmark, supported by higher participation and renewed capital inflows. The latest correction was the first significant break of that trend.
Historically, periods in which bitcoin trades below its Metcalfe value have generated strong future returns. Twelve-month performance under these conditions has been positive 96% of the time, with an average gain of 132%, compared to 75% and 68% for other periods, according to Peterson.
Tailwinds for network growth
Additionally, the supply of long-term holders (LTH) has increased significantly over the past 10 days, increasing by approximately 50,000 BTC. LTHs are defined as investors who have held their bitcoins for at least 155 days. This cohort has been one of the main sources of selling pressure over the last 12 months. As coins continue to mature out of short-term speculative hands and migrate to LTH wallets, and with LTHs now accumulating rather than being distributed on a net aggregate basis, this reduction in selling pressure should serve as a significant tailwind for the bitcoin price.
