Joao Wedson

Bitcoin’s Valuation Is Rising Faster Than Its Adoption

Bitcoin’s Metcalfe Ratio is currently around 3.23, indicating that its market capitalization has grown faster than user activity across the network.

This metric compares Bitcoin’s market value with the square of its active addresses, following the principles of Metcalfe’s Law.

When the ratio rises, it means the price is moving further away from the growth in network participation. This does not necessarily mean there is no demand, but it suggests that the valuation is being supported by proportionally lower activity, increasing the speculative component of the market.

Higher values may indicate that Bitcoin is trading at a premium relative to its adoption fundamentals. Lower values, on the other hand, may suggest potential undervaluation relative to network usage.

In the short term, price can continue to be driven by liquidity and speculation. In the long term, however, adoption needs to keep pace with valuation.

Focus on the Alpha.

Alphractal.com

The 6 month Liquidation Levels show that the main liquidation pools are located between $55,000 and $57,000 for Longs, and between $82,000 and $84,000 for Shorts.

What stands out is the massive concentration around $57,000, which is much closer to Bitcoin’s current price.

If Bitcoin moves toward this region, a huge number of traders could be liquidated across multiple exchanges.

Access the most powerful Liquidation Levels tool in the market at Alphractal.com and set alerts around the price zones where traders are most likely to be liquidated.

Over the past two weeks, a major liquidation cluster has formed between $56,200 and $57,500.

Bitcoin needs to remain above its current price levels. Otherwise, the most likely scenario is a move lower to liquidate these leveraged long positions.

$BTC

The current Bitcoin Bear Market can already be considered one of the most severe in its history.

Percent Supply in Loss has returned to levels similar to those observed in November 2022, showing that an extremely large share of the circulating supply is currently underwater.

But there is one important difference.

In November 2022, Bitcoin had approximately 19.2 million BTC in circulation. Today, the circulating supply is close to 20.05 million BTC.

This means that even with a similar percentage of the supply in loss, the absolute amount of Bitcoin trading below its acquisition price is significantly higher today.

In other words, more coins are currently carrying unrealized losses than during the 2022 cycle bottom.

This scenario also exposes an uncomfortable reality about the previous Bull Market. Despite new all time highs, institutional adoption, and the expansion of Bitcoin ETFs, a massive portion of the market ended up buying at elevated prices and now remains underwater.

From the perspective of how losses are distributed across investors, the previous Bull Market may be considered one of the weakest and least inclusive in Bitcoin’s history.

Percent Supply in Loss measures the share of the circulating supply that is currently underwater.

The higher the indicator, the larger the fraction of the market holding positions at a loss, which is commonly associated with market stress, capitulation, and the later stages of major drawdowns.

The market may have reached new all time highs.

But a large portion of investors never truly participated in that appreciation.

Data: Alphractal

⚠️An important shift is taking place in Bitcoin’s supply structure. Nearly every Supply Age Band is declining, with one major exception: coins that have remained unmoved for 6 to 12 months. The HODL Waves chart makes this change even clearer. The share of this cohort in the total supply is rising rapidly, showing that a growing portion of the Bitcoin acquired over the past several months remains untouched. This suggests that many investors have endured volatility, corrections, and shifts in market sentiment without selling their positions. This is not just supply aging. It may be a sign of conviction. If these coins remain unmoved, they will gradually migrate into older age bands, strengthening Long-Term Holder Supply and reducing the amount of Bitcoin immediately available for trading. The market is seeing fewer young coins and a growing concentration in the 6 to 12-month band. The key question is: will these investors continue to hold, or will this cohort eventually become a future distribution zone? Get access to the market’s best metrics and signals, powered by a powerful Alpha AI. Start now at Alphractal. com. $BTC

The Crypto Fear and Greed Index remains in the Extreme Fear zone, while the Stocks Fear and Greed Index is in the Neutral zone and slightly bullish.

The differences are clear, but it is noticeable that sentiment in the stock market is less extreme than in the crypto market.

Several factors explain this, such as market maturity, investor behavior, excessive narratives in crypto, and price volatility itself.

See more sentiment analysis at Alphractal

S&P 500 / M2 is repeating the dot-com fractal. Three months after my first publication, the fractal remains strong and intact. I believe everyone should pay attention to what is happening with the S&P 500 right now. The current structure shows strong similarities to the 1996 to 2002 period. If this pattern repeats, the S&P 500 could reach its cycle top by late 2026 or in the first months of 2027. My theory is that during this sideways phase, which could extend into 2028, Bitcoin will gain tremendous strength due to capital rotation from traditional markets into risk assets before the final stage of equity distribution. Those closest to me know that I believe this future Bitcoin rally could be the last major one before a long bear market begins after 2029. That is my plan.

Most people look at Bitcoin price.

We look at structure.

In this video, I introduce Structural Market Bands, a new model from Alphractal Research designed to identify where Bitcoin may be entering unsustainable market conditions.

Parabolic euphoria. Panic capitulation. Structural exhaustion.

Watch here:
https://youtu.be/0u409y3Rl0c

Data first. Narratives later.

Once again, unliquidated Long positions are dominating BTC, ETH, XRP, and SOL.

The market has moved up very weakly over the past few days, and the current moment deserves a bit more attention.

Any slip in the next few hours could allow bears to take control, triggering a new wave of fear.

The situation for ETH, SOL, and XRP is even more delicate, with a huge amount of unliquidated Long positions accumulated over the past 30 days.

Alphractal.com

Once again, unliquidated Long positions are dominating $BTC , $ETH, $XRP, and $SOL.

The market has moved up very weakly over the past few days, and the current moment deserves a bit more attention.

Any slip in the next few hours could allow bears to take control, triggering a new wave of fear.

The situation for ETH, SOL, and XRP is even more delicate, with a huge amount of unliquidated Long positions accumulated over the past 30 days.

The number of social media posts about cryptocurrencies is showing signs of increasing.

After a decline at the end of June, the number of posts has recently started to rise again.

This is a sign that retail investors and many analysts are becoming more comfortable talking about cryptocurrencies again.

Access the most complete market analytics platform today.

Alphractal.com

Extreme sentiment has disappeared from the crypto market! We truly need to see strong optimism, but it must be aligned with other on-chain metrics and real buying strength. Otherwise, a dead cat bounce is the most likely scenario.

The biggest Bitcoin opportunities appear when even Long-Term Holders lose their major advantage over Short-Term Holders. When the LTH/STH SOPR Ratio drops into depressed regions, the market has usually already gone through a strong compression in profitability. Historically, these zones have offered some of the best accumulation opportunities for Bitcoin. This is powerful because it does not measure opinion. It measures real on-chain behavior. Alphractal. com

Bitcoin has entered a decisive phase. Supply in Profit has lost its trendline for the first time, while Short-Term Holders are no longer as pressured as they were before. In this new video, I explain why I believe the final accumulation phase has already begun, but also why I still expect one last wave of volatility due to Liquidation Levels. Fasten your seatbelts. https://www.youtube.com/watch?v=Dc1YgJuOaiE

Bitcoin’s STH Net Unrealized Profit/Loss is currently at -$36B.

STH Net Unrealized Profit/Loss measures the net paper profit or loss held by Short-Term Holders.

Formula: STH Unrealized Profit minus STH Unrealized Loss.

Positive values indicate that recent buyers are still holding net gains. Negative values indicate widespread underwater positions and a more fragile market structure.

Interestingly, this metric was close to -$120B in February, when capitulation reached its peak in terms of unrealized losses.

Even though Bitcoin is now trading at lower prices than in February, Short-Term Holders are not carrying the same level of unrealized losses.

This is because the Short-Term Holder Realized Price is not as far from the current price as it was back in February.

This suggests that accumulation by Short-Term Holders may already be taking place.

To learn more about Bitcoin’s on-chain health and activate alerts and Alpha AI insights, visit Alphractal.com .

🐳Whales vs Retail shows that whales have reached a level of interest in Bitcoin Shorts very similar to what we saw in 2022.

Meanwhile, retail continues to move in the opposite direction, persistently favoring Longs.

This is a challenging moment for Short-Term Holders and leveraged traders.

When whales and retail are positioned so differently, risk increases and high-quality signals become even more important.

Do not stay without this signal.

Activate your alerts on Alphractal.com

Altcoin $ICNT , Impossible Cloud Network Token, is up 28% today, and here are its Liquidation Levels from 7 days to 90 days.

Before the move up, it had basically liquidated all the bulls.

And even though, in the short term, there are still many liquidation levels below, which increases the risk of entering right now, the big lesson here is clear:

In the crypto market, liquidity and trader liquidations are what move prices.

That is why so many traders struggle to understand why a crypto asset rises or falls without any strong short term narrative behind it.

Start your 3-day free trial at Alphractal.com

The short term still looks terrible for Bitcoin and altcoins.

Bitcoin liquidity changes constantly, and over the past few hours many traders have continued opening long positions.

For now, I think doing that is a terrible decision.

Activate your alerts on Liquidation Levels and only enter when other traders are seriously hurt.

$BTC $ETH
#Bearmarket

The only thing Short-Term Holders are doing right now is realizing losses.

Bitcoin has not allowed these investors to realize profits for quite some time.

The STH Realized Profit/Loss Ratio makes it clear that the current environment is dominated by on-chain movements at a loss.

This is typical of a bear market, and once Realized Loss starts losing strength, Bitcoin will likely be in the process of forming a bottom.

That is why it is necessary to monitor this closely on Alphractal.com.

🔥The newest Liquidation Levels are now live on Alphractal!

Now even better.

Powered by data from 30 exchanges, an aggregated model, and a framework that takes into account positions by trade size, whale positioning, and deleveraging algorithms.

This is a Premium tool, so it requires a Pro license.

But you can still take advantage of the free 3-day trial.

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