Bitcoin’s recent price action has been nothing short of exhilarating, but behind the market hype lies a wealth of on-chain data that offers deeper insights. By analyzing metrics that measure network activity, investor sentiment, and Bitcoin market cycles, we can get a clearer picture of Bitcoin’s current situation and potential trajectory.
Plenty of upside remaining
MVRV Z-score It compares Bitcoin’s market value, or price multiplied by the circulating supply, with its realized value, which is the average price at which all Bitcoins were last transacted. Historically, this metric indicates overheated markets when it enters the red zone, while the green zone indicates widespread losses and possible currency depreciation.
Right now, even though Bitcoin is rising to all-time highs, the Z score remains in neutral territory. Previous bull runs have seen Z-scores reach highs of 7 to 10, exceeding the current level of around 3. If history repeats, this suggests there is plenty of room for further price growth.
Profitability of miners
Multiple Puell It evaluates a miner’s profitability by comparing its daily USD-denominated revenue to its previous one-year moving average. After the halving, miner profits fell by 50%, keeping profits down for several months as the price of Bitcoin consolidated for most of 2024.
But so far, as Bitcoin surges to new highs, the multiple indicates only a 30% increase in profitability compared to historical averages. This suggests that we are still in the early to mid-stages of a bull market, and when comparing 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, consolidation, and finally recovery of the 1.00 multiple indicating the exponential phase of the price movement.
Measure market sentiment
Net unrealized gains and losses (NUPL) The metric measures a network’s overall profitability, mapping sentiment across stages such as optimism, faith, and euphoria. Similar to the MVRV Z-Score because it is derived from an investor’s realized value or cost basis, it looks at the current estimated profits or losses for all shareholders.
At present, Bitcoin remains in the “faith” zone, far from “euphoria” or “greed.” This is in line with other data suggesting there is plenty of room for prices to rise before market saturation is reached. Especially considering that this metric is still at lower levels than this metric was reached earlier this year in March when we set the previous all-time high.
Long-term shareholder trends
The percentage of Bitcoin held for more than one year, represented by 1+ year of HODL waveis still exceptionally high at around 64%, which is still higher than any other point in Bitcoin history before this cycle. Previous price peaks in 2017 and 2021 saw these values fall to 40% and 53%, respectively, as long-term bondholders began to realize profits. If something similar happened during this cycle, we would still have millions of Bitcoins to transfer to new market participants.
So far, only about 800,000 bitcoins have been transferred from Long term stand supply For new market participants during this session. In past sessions, as much as 2-4 million Bitcoins were traded, highlighting that long-term holders have not fully cashed out yet. This indicates a relatively nascent phase of the current uptrend.
Track the “smart money”
the The days of currency were ruined The metric weights transactions based on how long the coins are held, with an emphasis on whale activity. We can then multiply this value by the price of BTC at that time to find out the price Multiple value destroyed days (VDD).. This gives us a clear view into whether the biggest and smartest BTC holders are starting to realize profits on their positions.
Current levels remain far from the red areas that typically appear during market tops. This means that whales and the “smart money” have not yet unloaded large portions of their holdings and are still waiting for higher prices before they start making big profits.
conclusion
Despite the rally, on-chain metrics overwhelmingly indicate that Bitcoin is far from overheated. Long-term holders remain largely resilient, and indicators like the MVRV Z-score, NUPL, and Puell Multiple highlight room for growth. However, some profit-taking and new market participants are signaling a move into the mid-to-late cycle phase, which will likely continue for most of 2025.
For investors, the key idea is to remain data-driven. Emotional decisions fueled by FOMO and euphoria can be costly. Instead, follow the fundamental data that fuels Bitcoin and use tools like the metrics discussed above to guide your investing and analysis.
For a more in-depth look at this topic, watch a recent YouTube video here: What’s happening on-chain: Bitcoin update