Bitcoin briefly slipped below its network value based on Metcalfe value modeling for the first time in nearly two years, according to network economist Timothy Peterson.
This is typically a signal that often marks the final stages of market resets, he said.
“While this does not necessarily signal a bottom, it does indicate that most of the debt has been removed and the ‘bubble’ has deflated,” Peterson said.
Metcalfe Value estimates the fundamental value of a network using activity and user-based growth, and has historically offered useful context during major cycle turning points.
The fall below the network’s value coincided with the largest pullback of the bitcoin cycle, a drop of around 36% that pushed the price to around $80,000. This decision drained debt and resolved speculative excesses, thus paving the way for a clear rebound. Since then, Bitcoin has returned above $90,000 as buyers have stepped in and network conditions have stabilized.
During the 2022 bear market, Bitcoin spent the entire period trading below its Metcalfe value as activity and sentiment weakened. Since the start of the new cycle in early 2023, the price has remained consistently above this benchmark, supported by growing participation and new capital inflows. The latest correction was the first significant breakout of this trend.
Historically, periods where bitcoin trades below its Metcalfe value have generated strong forward returns. Year-over-year performance under these conditions was positive 96% of the time, with an average gain of 132%, compared to 75% and 68% for other periods, according to Peterson.
Favorable winds for network growth
Additionally, the long-term holder (LTH) supply has increased significantly over the past 10 days, increasing by approximately 50,000 BTC. LTHs are defined as investors who have held their bitcoin for at least 155 days. This cohort has been one of the biggest sources of selling pressure over the past 12 months. As coins continue to mature from short-term speculative hands and migrate into LTH wallets, and LTH now accumulates rather than distributing on an aggregate net basis, this reduction in sell-side pressure should serve as a significant tailwind for Bitcoin price.
