Introduction
Bitcoin price recently surged past $98,000, making investors excited. But some experts are worried because fewer people are using the BTC network, which could mean its price is too high. If BTC’s price keeps rising while fewer people are using it, it might not be able to stay this high for long.
Bitcoin’s Price vs. Network Activity
Bitcoin has been on a strong upward trend, even crossing $100,000 before dropping to $96,000. While this is good news for investors, fewer people are making transactions with BTC. Normally, when Bitcoin’s price goes up, more people should be using the network. But right now, the opposite is happening.
A way to measure if Bitcoin’s price is fair is called Metcalfe’s Law. This method looks at how many people are using BTC and calculates a fair price. According to this model, BTC should be worth somewhere between $48,000 and $95,000. Since Bitcoin is trading above this range, some experts believe it is overpriced and that external factors, like big investors and exchange-traded funds (ETFs), might be pushing the price higher than it should be.
Are Investors Preparing to Sell?
Another important measure is the Market Value to Realized Value (MVRV) ratio, which tells us if investors are making a lot of profit compared to the price they originally paid for BTC. If the MVRV ratio is too high, it means many investors have unrealized profits, and they might start selling to lock in their gains.
In the past, when MVRV went above 2.4, BTC’s price often dropped because investors began selling. Since the MVRV ratio has recently started going down, this suggests some investors might already be selling, which could lead to more selling pressure in the future.
Why Are Fewer People Using Bitcoin?
Bitcoin’s daily active addresses—which count the number of people making transactions—have dropped to a one-year low. This has been happening since March 2024, even though BTC’s price keeps going up. Normally, if BTC is truly gaining value, more people should be using it, not fewer.
This decline in activity suggests that BTC’s price might be rising for other reasons, like institutional buying or investor hype, rather than real-world use. If fewer people are transacting, it could mean that BTC’s current price isn’t fully supported by its actual usage.
Where Is Bitcoin’s Price Headed?
Bitcoin’s price is now sitting around $98,710, close to its 50-day moving average. If BTC stays above this level, it might continue climbing toward $100,000. But if BTC drops below this level, it could fall toward $95,000, which some experts believe is a fairer price based on past trends.
Bitcoin’s 200-day moving average is still much lower than its current price, which means BTC is in a long-term uptrend. However, in the short term, it could face selling pressure if more investors decide to cash out their profits.
Will Bitcoin Keep Climbing or Drop?
Bitcoin’s price surge above $98,000 looks strong, but fewer people using the network is a warning sign. If activity keeps dropping and investors keep selling, BTC could correct to a lower price, possibly between $95,000 and $90,000.
However, if big investors keep buying and demand stays strong, BTC could ignore these warning signs and continue its rally. Traders and investors should watch for changes in network activity and price movements to see if BTC is truly worth its current price or if a correction is coming.
