Miami, Florida — Bitcoin’s resilience is being tested as its valuation appears disconnected from network activity, raising concerns about long-term sustainability. As the cryptocurrency trades around $108,129, signs of weakening demand and increasing supply pressure are becoming evident.
Despite a modest 0.68% rise in the past day, the uptick masks underlying challenges. Key indicators suggest that newer buyers are struggling to absorb the cryptocurrencies offered by miners and long-term holders, pointing to a potential downturn in the market.
Recent analytics reveal that profitability among miners has surged, prompting fears of increased selling. The Puell Multiple, which gauges miner profitability, has climbed significantly, indicating a potential correlation with rising selling pressure. Concurrently, the NVT Ratio, which compares market valuation to transaction volume, shows that Bitcoin’s market cap is growing faster than its usage, often regarded as a signal of overvaluation.
This divergence in metrics hints at a troubling imbalance: while Bitcoin’s price remains elevated, the activity that typically supports such valuation is lacking. If demand does not pick up, miners might prioritize offloading their assets, adding further pressure to prices.
On the holder side, an overwhelming majority of Bitcoin’s unspent transaction outputs (UTXOs) are currently in profit, with nearly 99% enjoying unrealized gains. While this might initially seem positive, it creates a lack of incentive for holders to purchase more during price dips. This imbalance can often precede a market top, with widespread profit-taking likely to follow.
Amid these dynamics, Bitcoin has recently seen a net inflow to exchanges totaling $57.5 million. Such trends may signal a shift in sentiment, suggesting that some investors are gearing up to liquidate their holdings. If this influx translates into increased sell orders, it could amplify downward pressure on the price.
Meanwhile, as Bitcoin’s price hovers around the $108,000 mark, the number of active addresses has not kept pace. This negative divergence indicates that price movements may not reflect robust user adoption, a condition that has historically signaled corrections during bullish phases. The persistent decline in address activity raises red flags about the sustainability of the current price levels.
Without a resurgence in meaningful demand and increased network engagement, Bitcoin may be poised for heightened volatility. Analysts warn that unless these fundamental aspects improve, maintaining its current valuation could become increasingly difficult in the near future. In the ever-evolving landscape of cryptocurrency, maintaining a close watch on these trends will be crucial for investors navigating this uncertain territory.