Bitcoin’s recent price action has been nothing short of exciting, but beyond the market buzz lies a wealth of on-chain data that offers deeper insights. By analyzing metrics that measure network activity, investor sentiment, and BTC market cycles, we can gain a clearer picture of Bitcoin’s current position and potential trajectory.
There is still plenty of upside left
The MVRV Z-Score compares Bitcoin’s market cap, or the price multiplied by the circulating supply, to the realized cap, which is the average price at which all BTC last traded. Historically, this measure indicates overheated markets when it enters the red zone, while the green zone indicates widespread losses and potential undervaluation.
Currently, despite Bitcoin’s rise to new all-time highs, the Z-score remains in neutral territory. In previous bull runs, Z-scores have reached highs of 7 to 10, well above the current level of around 3. If history repeats itself, this indicates significant room for further price growth.
Miner profitability
The Puell multiple evaluates miners’ profitability by comparing their daily USD turnover to their one-year moving average. After the halving, miners’ revenues fell by 50%, leading to a multi-month period of lower revenues as the BTC price consolidated for most of 2024.
But even as Bitcoin has soared to new highs, the multiple indicates an increase in profitability of only 30% over historical averages. This suggests that we are still in the early to mid stages of the bull market, and comparing the patterns in the data, it appears that we have the potential for explosive growth similar to 2016 and 2020. With a reset after the halving will bring consolidation, and finally a reclamation of the 1.00 multiple level, signifying the exponential phase of price action.
Measuring market sentiment
The net unrealized gain and loss (NUPL) Metrics quantify the overall profitability of the network and map sentiment across phases such as optimism, faith and euphoria. Similar to the MVRV Z-Score in that it is derived from realized value or investor cost basis, it looks at the current estimated profit or loss for all holders.
Currently, Bitcoin remains in the ‘Belief’ zone, far from ‘Euphoria’ or ‘Greed’. This is consistent with other data indicating that there is ample room for price appreciation before market saturation is reached. Especially considering that this metric is still at a lower level than this metric reached earlier this year in March when we hit the previous all-time high.
Long-term holding trends
The percentage of Bitcoin held for more than a year, represented by the 1+ years of HODL golfremains exceptionally high at around 64%, which is still higher than at any other point in Bitcoin history prior to this cycle. At previous price peaks in 2017 and 2021, these values fell to 40% and 53% respectively, as long-term holders started making profits. If something similar were to happen during this cycle, we would still need to transfer millions of bitcoins to new market participants.
So far, only about 800,000 BTC has been transferred from the Long-term container supply to newer market participants during this cycle. Up to 2-4 million BTC have changed hands in recent cycles, highlighting that long-term holders have yet to be fully paid out. This indicates a relatively nascent phase of the current bull run.
Following ‘Smart Money’
The Currency days destroyed Metrics weigh transactions based on coin holding time, focusing on whaling activity. We can then multiply that value by the BTC price at that time to see the value Value days destroyed (VDD) Multiple. This gives us a clear insight into whether the biggest and brightest BTC holders are starting to make profits on their positions.
Current levels remain far from the red zones typically seen during market tops. This means that whales and ‘smart money’ have not yet lost significant portions of their assets and are still waiting for higher prices before realizing substantial profits.
Conclusion
Despite the rally, on-chain metrics overwhelmingly suggest that Bitcoin is far from overheating. Long-term investors remain largely steadfast, and indicators like the MVRV Z-score, NUPL and Puell Multiple all point to room for growth. That said, some profit-taking and new market participants are signaling a transition into the mid- to late-cycle phase, which could last through most of 2025.
It is important for investors to remain data-driven. Emotional decisions, fueled by FOMO and euphoria, can be costly. Instead, follow the underlying data that fuels Bitcoin and use tools like the metrics discussed above to guide your own investments and analysis.
For a more in-depth look at this topic, watch a recent YouTube video here: What’s happening in the chain: Bitcoin update