Bitcoin has recently broken above $71,000, gaining 3% in the last 24 hours. However, it is facing resistance at the $71,400 level and a lack of trading volume could lead to another range-bound period
While Bitcoin’s short-term price action lacks a clear bullish spark, its higher timeframe charts remain bullish.
The Thermo Cap ratio, which represents the total investment cost into the Bitcoin network, suggests the current prices may not be the top of the bull run. It remains well below previous cycle highs.
However, the Net Unrealized Profit/Loss metric is above 0.5, indicating many investors are in profit and could be incentivized to take profits. Historically, this has preceded sharp corrections of 20% or more in Bitcoin’s price.
The Network Value to Transactions (NVT) ratio, which compares market cap to transacted volume, has been rising, potentially signaling Bitcoin is overvalued relative to its on-chain activity. But this could also reflect Bitcoin’s growing perception as an inflation hedge.
Overall, there are signs of potential overvaluation in Bitcoin, but its strong network fundamentals suggest the current bull run may not be over yet. Investors must weigh the risks and potential rewards in deciding whether to cash out or hold.
Source: AMB CRYPTO
