Bitcoin Falls Below Metcalfe Value for First Time in Two Years, Signals Potential Upside
Bitcoin briefly dropped below its Metcalfe network value for the first time in nearly two years, according to network economist Timothy Peterson.
“This doesn’t necessarily mark a bottom, but it shows that most leverage has been cleared and the ‘bubble’ has deflated,” Peterson said, noting that such dips often occur in the late stages of market resets.
Metcalfe value measures a network’s fundamental worth based on user activity and growth, historically offering insight during major market cycle shifts.
The decline coincided with bitcoin’s steepest pullback of the current cycle, a 36% drop that brought prices near $80,000, unwinding speculative excess and draining leverage. Bitcoin has since rebounded above $90,000 as buyers returned and network conditions stabilized.
During the 2022 bear market, bitcoin traded below Metcalfe value amid weakening activity and sentiment. Since early 2023, it had consistently stayed above the benchmark, supported by rising participation and capital inflows. The recent correction marked the first meaningful break of this trend.
Historically, trading below Metcalfe value has preceded strong gains. Twelve-month returns under these conditions have been positive 96% of the time, with an average gain of 132%, compared to 75% and 68% during other periods, Peterson noted.
Adding to the bullish outlook, long-term holder (LTH) supply has risen by roughly 50,000 BTC over the past 10 days. LTHs—investors holding bitcoin for at least 155 days—have been a key source of selling pressure. As coins migrate from short-term holders into LTH wallets, net accumulation rises, reducing sell-side pressure and providing a potential tailwind for bitcoin’s price.
