Bitcoin Drops Below Metcalfe Value for First Time in Two Years, Historically Signals Strong Gains
Bitcoin briefly fell below its Metcalfe network value for the first time in nearly two years, according to network economist Timothy Peterson.
“This does not necessarily mark a market bottom, but it shows that most leverage has been removed and the ‘bubble’ has deflated,” Peterson said, noting that such dips often occur in the late stages of market resets.
Metcalfe value estimates a network’s fundamental worth based on user activity and growth, and historically it has provided guidance during major market cycle turns.
The recent dip coincided with bitcoin’s steepest pullback of the current cycle, a 36% decline that pushed prices near $80,000, unwinding speculative excess and draining leverage. Bitcoin has since rebounded above $90,000 as buyers returned and network conditions stabilized.
During the 2022 bear market, bitcoin remained below Metcalfe value amid declining activity and sentiment. Since early 2023, the price had consistently stayed above this benchmark, supported by rising participation and capital inflows. The latest correction marked the first significant deviation from that trend.
Historically, periods when bitcoin trades below Metcalfe value have been followed by strong gains. Over the next 12 months, returns have been positive 96% of the time, averaging 132%, compared to 75% and 68% for other periods, Peterson said.
Supporting the bullish outlook, long-term holder (LTH) supply has grown by roughly 50,000 BTC in the past 10 days. LTHs—investors holding bitcoin for at least 155 days—have been a major source of selling pressure. As coins shift from short-term holders into LTH wallets, net accumulation rises, reducing sell-side pressure and providing a potential tailwind for bitcoin’s price
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