Bitcoin’s price has once again pulled back after briefly reclaiming the $100,000 mark on Wednesday—still over 8% below its all-time high set on December 17, 2024. While volatility persists, growing macroeconomic tailwinds and evolving market dynamics suggest the current cycle may still have room to run.
Samir Kerbage, Chief Investment Officer at Hashdex, recently highlighted that the broader economic and regulatory environment is increasingly favorable for digital assets. With expectations rising that the Federal Reserve and other central banks will continue cutting interest rates in 2025, global liquidity could expand—potentially benefiting cryptocurrencies like Bitcoin.
Following weaker-than-expected core Consumer Price Index (CPI) data released in December, federal funds futures traders now assign roughly a 50% probability to two 25-basis-point rate cuts by year-end—up from around 40% just days earlier. Lower interest rates typically boost risk assets, and Bitcoin has historically performed well during such monetary easing cycles.
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Additionally, anticipation is building around U.S. President-elect Donald Trump’s return to office on January 20, 2025. Trump has pledged to establish a strategic Bitcoin reserve in the United States and intends to appoint Paul Atkins, a former SEC commissioner seen as pro-crypto, to lead the agency. These developments could further accelerate institutional adoption and regulatory clarity.
But beyond macro trends, on-chain metrics offer deeper insight into Bitcoin’s current market phase. Analysts at 21Shares suggest that several key indicators show Bitcoin has not yet reached its cyclical peak—hinting at potential upside ahead.
Understanding Bitcoin’s Four-Year Market Cycle
Bitcoin is often analyzed through a four-year cycle framework, shaped largely by its halving events—when block rewards for miners are cut in half approximately every four years. Each cycle typically unfolds in four stages:
- Breakout: Early price acceleration as awareness grows.
- Hype: Rapid price appreciation driven by retail and media attention.
- Correction: A sharp pullback following over-enthusiasm.
- Accumulation: Smart money buys the dip before the next cycle begins.
While Bitcoin’s history since its 2009 inception remains relatively short—limiting statistical certainty—analysts continue to rely on these patterns for context. However, the landscape has evolved significantly since previous cycles. The approval of spot Bitcoin ETFs in early 2024 and increased institutional participation have altered investor behavior and may influence traditional indicators.
Let’s explore three critical on-chain metrics that suggest the current rally isn’t over.
MVRV Ratio: Gauging Market Valuation
The Market-Value-to-Realized-Value (MVRV) ratio is a widely used metric to assess whether Bitcoin is overvalued or undervalued. It compares Bitcoin’s current market capitalization to its realized cap—the sum of all coins valued at the price when they were last moved.
- MVRV > 7: Indicates extreme overvaluation; often signals a market top.
- MVRV < 0: Suggests deep undervaluation; typically seen at cycle lows.
Currently, Bitcoin’s MVRV ratio sits between 2.5 and 3, which suggests moderate valuation—not the kind of froth seen at previous peaks. According to 21Shares analysts, this reading implies we may be approaching a local high, but it's far from signaling a major cycle top.
For context, Bitcoin would need to surpass $200,000 for the MVRV ratio to reach 7—assuming no major shifts in on-chain activity. This suggests substantial upside potential remains before reaching historically overheated levels.
Unrealized Net Profit/Loss: Measuring Investor Sentiment
Another powerful on-chain indicator is the Unrealized Net Profit/Loss, which reveals whether the majority of Bitcoin holders are in profit or loss based on current prices.
Calculated as the difference between market value and realized value, divided by market cap, this metric provides insight into collective investor psychology:
- Positive values: Most holders are profitable.
- Higher values (approaching 0.75–1.0): Signal euphoria or “greed,” often preceding tops.
At current prices near $100,000, the unrealized net profit/loss ratio hovers between 0.5 and 0.75—indicating strong profitability but not yet at panic-buying levels. Historically, readings close to or above 0.75 have preceded major corrections.
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This means that while many investors are sitting on gains, widespread euphoria hasn’t taken hold. As long as selling pressure remains contained and new buyers enter the market, further upward momentum is possible.
Long-Term Holder Supply Shock: Assessing Selling Pressure
One of the most telling signs of an impending top is increased selling activity from long-term holders (LTHs)—those who’ve held Bitcoin for more than 155 days. These investors are typically less reactive to short-term volatility and represent "smart money" accumulation.
The Long-Term Holder Sell-Off Risk Ratio measures the proportion of supply being sold by LTHs relative to historical norms. When this ratio spikes, it often signals distribution and potential reversal.
At Bitcoin’s December 2024 peak, the LTH sell-off risk ratio reached about 0.4%—well below the 0.8% threshold that many on-chain analysts consider a warning sign of overheating markets.
In fact, recent price dips were primarily driven by short-term holders (those owning less than 155 days), suggesting profit-taking among newer entrants rather than a broad-based exodus from seasoned investors.
This distinction is crucial: if long-term holders aren’t selling, the foundation of support remains intact.
FAQ: Common Questions About Bitcoin Cycle Indicators
Q: What is the MVRV ratio and why does it matter?
A: The MVRV ratio compares Bitcoin’s market value to its realized value. A high ratio (above 7) suggests overvaluation and potential topping behavior, while low values indicate undervaluation. Current readings suggest Bitcoin is fairly valued—not overbought.
Q: How do on-chain metrics differ from traditional technical analysis?
A: On-chain data reflects actual wallet movements and transaction behaviors recorded on the blockchain, offering objective insights into supply distribution, investor sentiment, and holder behavior—unlike price charts alone.
Q: Can Bitcoin really reach $200,000 based on these metrics?
A: While no model guarantees future prices, reaching an MVRV of 7 would require such a level under current conditions. Combined with increasing institutional demand and macro tailwinds, it's within the realm of possibility in this cycle.
Q: Are we close to a market top?
A: Not yet. Key indicators like MVRV, unrealized profit/loss, and long-term holder behavior haven’t shown signs of extreme exuberance. Until these cross critical thresholds, the market may continue upward.
Q: Why are long-term holders so important?
A: Long-term holders tend to accumulate during downturns and hold through volatility. Their reluctance to sell suggests confidence in future value—a bullish signal for sustained price growth.
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Final Thoughts: Room to Run in This Cycle
Despite short-term fluctuations, multiple on-chain indicators suggest Bitcoin has not yet entered the euphoric phase typical of cycle peaks. The MVRV ratio remains moderate, unrealized profits haven’t reached greedy territory, and long-term holders are not showing signs of mass selling.
With supportive macro conditions—including anticipated rate cuts—and growing institutional adoption fueled by ETFs and regulatory clarity, this cycle may extend further than many expect.
While past performance doesn’t guarantee future results, data-driven analysis offers valuable guidance. For investors, monitoring these metrics can help distinguish between healthy consolidation and true topping patterns.
As always, market conditions evolve rapidly. Staying informed with accurate, real-time data is essential for navigating volatile environments—and positioning for long-term success.
Keywords: Bitcoin cycle indicators, MVRV ratio, unrealized net profit loss, long-term holder sell-off risk, on-chain analysis, Bitcoin ETFs, cryptocurrency market cycle, Bitcoin price prediction.