NVM Ratio Breaks Record: BTC Market in Uncharted Zone

A historic event has been recorded on the blockchain: the 30-day average of the NVM Ratio, which measures Bitcoin's network capitalization relative to its user activity, has broken its all-time high, which stood since November 2010. This breakthrough occurred after nearly 14 years and has pushed the market into a zone without precedent for analysis.

Analysts have stated that the rising NVM Ratio indicates that BTC price growth is significantly outpacing network development and user activity. Fundamentally, this could indicate an imbalance, where market value is no longer based on fundamental metrics.

Historically, such peaks have served as a warning sign. In previous cycles, they were accompanied by overheated expectations and ended in deep price corrections. This dynamic is leading some experts to speculate on the high probability of a decline in Bitcoin prices following a rapid rise.

However, there is also an opposing interpretation. Many believe Bitcoin has transformed from a payment instrument into a digital equivalent of gold. In this paradigm, the importance of daily user activity declines, with institutional demand and inflows into spot ETFs becoming the key factor. From this perspective, new NVM Ratio records do not signal overheating, but rather reflect changes in the asset's valuation model.

Thus, the market is at a crossroads. Either the current indicator value indicates the formation of a bubble that will eventually correct, or it's the beginning of a new phase, where network activity-based metrics become less important. Experts say the situation calls for caution: investors and traders need to closely monitor the NVM Ratio and related metrics to respond to potential risks promptly.

Source: cryptonews.net