Bitcoin
Here’s Why – TradingView News
The CEO of on-chain analytics firm CryptoQuant explained that Bitcoin’s price is not currently overvalued based on its network fundamentals.
Bitcoin Price May Not Yet Be Overvalued Based on Thermo Cap Ratio
In a new post on X, CryptoQuant CEO and Founder Ki Young Ju discussed what the recent trend in Bitcoin Thermo Cap Ratio has been like. “Thermo Cap” is a capitalization model for BTC that calculates the total value of the asset considering the value of each token equal to the spot price when it was mined on the network.
Put another way, this model calculates the cumulative value of coins mined by miners since the inception of the blockchain. This is quite different from what, for example, the usual market capitalization does. In the case of market value, the current spot price is considered the value of all coins in circulation.
Since the coins that miners extract are the only way to increase the supply of cryptocurrency, Thermo Cap can be considered a measure of the “true” capital flows entering the network.
Here is a chart showing how the Bitcoin Thermo Cap has changed throughout its history:
NewsBTC
As the graph above shows, Thermo Cap presented an accelerated growth curve. This naturally reflects the increasing amount of capital flowing into the asset over the years.
In the context of the current topic, however, the indicator of interest is not the Thermo Cap itself, but rather the Thermo Cap Ratio. This metric tracks the relationship between Bitcoin’s market cap and Thermo Cap.
The graph below shows the Thermo Cap Ratio trend throughout the asset’s history.
An interesting pattern is visible on the chart. It appears that very high values of the Thermo Cap Ratio coincided with increases in the price of the cryptocurrency.
At high values, Bitcoin’s market cap is quite large compared to Thermo Cap, which means coins trade at a much higher rate than they were mined.
It is also evident that BTC bottoms occur when the index assumes low values. The indicator’s recent trend has been upward, but its value has not reached the levels where bull run tops would have occurred in the past. “Bitcoin is currently not overvalued based on network fundamentals,” notes the CryptoQuant founder.
BTC Price
Bitcoin has been unable to break out of its range recently as its price has maintained its sideways trend. Currently, BTC is trading around $68,900.