Bitcoin Briefly Dips Below Metcalfe Value for First Time in Two Years, Historically Signals Strong Gains

Bitcoin briefly fell below its network value, as measured by Metcalfe value modeling, for the first time in nearly two years, according to network economist Timothy Peterson.

“This doesn’t necessarily mark a market bottom, but it indicates that most leverage has been cleared and the ‘bubble’ has deflated,” Peterson said. He noted that such dips often occur during the late stages of market resets.

Metcalfe value estimates a network’s fundamental worth based on activity and user growth, and has historically provided valuable insight during major market cycle turns.

The recent drop coincided with bitcoin’s steepest pullback of the current cycle, a roughly 36% decline that pushed the price near $80,000. The move unwound speculative excess and removed leverage, paving the way for a swift rebound. Bitcoin has since climbed back above $90,000 as buyers returned and network conditions stabilized.

During the 2022 bear market, bitcoin remained below its Metcalfe value throughout, accompanied by declining activity and weak sentiment. Since the start of the new cycle in early 2023, the price had consistently stayed above this benchmark, supported by growing participation and capital inflows. The recent correction marked the first significant deviation from that trend.

Historically, trading below Metcalfe value has often led to strong forward returns. Twelve-month performance under these conditions has been positive 96% of the time, with an average gain of 132%, compared to 75% and 68% during other periods, Peterson said.

Supporting the bullish outlook, long-term holder (LTH) supply has grown by roughly 50,000 BTC over the past 10 days. LTHs—investors holding bitcoin for at least 155 days—have historically been a primary source of selling pressure. With coins maturing from short-term speculative hands into LTH wallets and net accumulation increasing, this reduction in sell-side pressure could provide a significant tailwind for bitcoin’s price.