- Bitcoin’s price surged past $98K, but declining network activity raises concerns about overvaluation.
- Bitcoin’s price rally to $98K clashed with weakening network fundamentals.
Bitcoin’s[BTC] price has declined after its surge over $100,000, recently touching $98K. While this price range excites investors, underlying on-chain data presents a contrasting narrative.
Network activity has hit a one-year low, raising concerns about whether current price levels are justified.
AMBCrypto assesses if fundamentals back Bitcoin’s rally by evaluating key valuation metrics like Metcalfe’s law and the Market Value to Realized Value (MVRV) ratio. This evaluation will determine if a correction is imminent.
Bitcoin’s valuation and network activity: A growing disconnect?
Bitcoin recently declined to $98K, down from the six-figure mark. However, a closer look at network activity suggests the cryptocurrency might be overvalued at current levels.
According to Metcalfe’s law, which values a network based on the number of active users, Bitcoin’s fair value falls between $48K and $95K.
With BTC trading above this range, concerns about sustainability arise.
Source: CryptoQuant
The Metcalfe Valuation Bands, which have historically guided Bitcoin’s price, indicate a potential deviation. Since February 2024, Bitcoin has largely remained between the red ($48K) and blue ($95K) valuation bands.
The current price exceeding this range suggests a speculative premium, possibly fueled by external factors like ETF inflows or macroeconomic optimism.
Network activity declining – A warning sign?
A deeper dive into Bitcoin’s network fundamentals reveals a decline in daily active addresses, a metric for user activity.
The drop in active addresses aligns with the downward trend in Metcalfe valuation bands since March 2024, reflecting reduced on-chain engagement.
This trend suggests that the underlying network fundamentals do not fully support the current valuation despite Bitcoin’s price rally.
Source: Glassnode
The Market Value to Realized Value (MVRV) ratio further reinforces this concern. Historically, an MVRV above 2.4 has preceded corrections, and the recent downtrend in this metric indicates potential overvaluation.
The gap between market price and realized value suggests investors may be holding unrealized gains, increasing the likelihood of profit-taking.
Technical indicators – Where is BTC headed?
From a technical perspective, Bitcoin maintained a bullish structure but showed signs of exhaustion.
The price is currently hovering near the 50-day Moving Average (MA) at $98,710, while momentum indicators suggest a slowdown.
If Bitcoin fails to hold above this level, a pullback toward the $95K region is possible, aligning with the upper Metcalfe valuation band.
However, Bitcoin could target psychological resistance at $100K if bullish momentum persists.
The 200-day MA remains far below current levels, indicating strong long-term support, but short-term overbought conditions cannot be ignored.
Correction or consolidation?
With network activity at a one-year low and price exceeding fair value estimates, Bitcoin appears overextended.
While external factors like institutional demand and macro trends could sustain its rally, on-chain fundamentals paint a more cautious picture. Investors should closely monitor network growth and key support levels to gauge Bitcoin’s next move.
– Read Bitcoin (BTC) Price Prediction 2025-26
If Bitcoin cannot sustain momentum above $98K, a healthy correction toward the $95K-$90K range could provide a better re-entry point.
On the other hand, if BTC reclaims network activity growth, the rally could resume, defying fundamental concerns.
