Bitcoin’s metrics suggest bull market is far from overvalued

Bitcoin’s valuation metrics suggest the bull market is far from over and could be setting the stage for even further highs. With no signs of overvaluation typically seen at price peaks, analysts are eyeing a current potential target of $146,000 in this cycle. 

In a Nov. 27 report, research firm CryptoQuant notes that the value held by new Bitcoin (BTC) holders still lags behind previous cycle levels. Holdings of new investors currently sit just above 50% of the total invested in the cryptocurrency, while in previous market tops, such as 2017 and 2021, it was at over 90% and 80%, respectively. 

These levels may be justified by a slow retail activity in Bitcoin purchases over recent weeks. According to the analysis, heightened retail activity is often a “typical condition of market cycle tops.” Since October, retail investors have reduced their holdings by 41,000 BTC, while larger investors have significantly increased their holdings, adding 130,000 BTC. 

“Previous bull cycles have ended when retail investors were buying aggressively, which is not the case today.”

The shift suggests a potential transition in market dynamics, with institutional and large-scale players driving the accumulation phase. Investors on exchange-traded funds (ETFs) led the purchases of Bitcoin in November, with weekly inflows soaring to a record $3.1 billion in the week ending Nov. 22 — when the cryptocurrency price reached a record of $99,655.50. 

The Bitcoin price declined to around $91,000 on Nov. 26, failing to break the $100,000 resistance level. For some analysts, the cryptocurrency may still see a 30% correction before crossing the six-figure milestone. 

CryptoQuant’s bull-bear market cycle indicator has been in the bull area since early November and has been rising since then. However, the indicator still lags from the overheated bull phase reached for the last time in March 2024, when Bitcoin achieved a new high, trading above $70,000. 

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From a realized price valuation perspective, Bitcoin’s top price target is currently at $146,000. “This price band has acted as a top for the price of Bitcoin in previous cycles, such as in April-May 2021,” states the report. “The P&L Index has not reached overvalued levels so far this cycle, which indicates the price would still have room to increase.”

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