PelinayPA2025-10-31

Bitcoin Turns Overvalued; A Possible Test Below $100K Ahead

The NVM Ratio compares Bitcoin’s network value to the expected network size based on Metcalfe’s Law. It measures whether the network is overvalued or undervalued relative to its price. In the chart, the periods where the purple area peaks generally indicate phases when the price overheated and corrections followed. Conversely, when the NVM Ratio hits bottom, network growth has supported price increases, and these periods have often marked the beginning of bullish phases. When the NVM Ratio sharply rises above 1, and especially above 2, the price has historically tended to pull back afterward. The current value of 2.97 suggests that the network valuation is well above the historical average, indicating that Bitcoin is currently trading in an overvalued zone relative to its network size. With the current price around $110K and the NVM Ratio remaining at elevated levels, this implies that network activity does not fully support the recent price growth, suggesting that Bitcoin may have entered a saturation zone. This metric signals potential downward pressure, meaning the price could move sideways or experience a mild pullback in the short to mid term. However, if the NVM Ratio remains persistently high, it may also indicate that the market is forming a perception of sustained growth based on network value. In that case, a consolidation phase rather than a sharp decline would be more likely. In summary, the NVM Ratio is currently near its peak, implying that Bitcoin could enter a cooling or profit taking phase in the near term. This suggests that the price might test the $102,600 and $98,500 support levels.