Viewpoint: The era of deep value for Bitcoin has ended, ushering in a period of expansion
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Viewpoint: The era of deep value for Bitcoin has ended, ushering in a period of expansion
An exciting new chapter has begun—welcome to the BTC momentum era.
Navigating Web3 tides with focused insightsSource: bitcoinist
Compiled by: Blockchain Knight
Charles Edwards, founder and CEO of Capriole Investments, recently published a series of posts on X announcing that Bitcoin's "deep value era" has ended and the "BTC momentum era" has begun.
Edwards' detailed analysis covers ten on-chain metrics he developed, collectively indicating a significant shift in crypto asset valuation and market dynamics.
One key metric is Bitcoin's energy value, which currently places BTC at $70,000.
"Bitcoin’s intrinsic value is priced purely by the joules of energy input into the network," explained Edwards. "At $70,000, BTC is fairly valued for the first time in two years."
Another metric proposed by Edwards, the SLRV Ribbons, tracks the ratio of short-term holders to long-term holders. The current trend suggests strong potential for high-return periods in BTC investment.
"Rising SLRV Ribbons typically isolate the highest-return risk-on periods for BTC, and the current trend still looks very strong," Edwards noted.
The Dynamic Range NVT Signal adds a valuation range to BTC’s 'price-to-earnings' ratio by comparing on-chain transaction volume with market capitalization.
According to Edwards, this indicator recently returned to a relatively fair value state after a period of overvaluation. This suggests that valuation metrics are normalizing following a stretch of being overvalued.
On the "cost of production" front, the crypto asset has surpassed its production cost, thanks to increased ordinals fees.
This indicates mining is once again highly profitable and could lead to further upward repricing.
"BTC has recently broken above its production cost, but the era of BTC as a value asset is over," Edwards stated.
The Hash Ribbon indicator, which Edwards calls his first on-chain metric, shows "local expansion in hash rate growth," serving as a proxy for miner confidence and network health.
A critical insight comes from the Miner Sell-Off Pressure metric. "Pressure is currently very high—comparable to 2017," Edwards pointed out. "This highlights several things: miners aren’t profitable, they’re struggling to sell BTC, and ETF demand is absorbing supply."
The BTC Yardstick and Hodler Growth Rate indicators suggest BTC may be in the early stages of a bull run, with an increasing number of holders beginning to take profits.
Still, Edwards advises: "Based on previous cycle peak durations, we should still have some time left."
Supply Delta and BTC Heater reveal the proportions of short-term versus long-term holders and overall market leverage, respectively. Both indicators reflect conditions historically seen before major market movements.
Finally, Edwards highlights the BTC Macro Index—a machine learning model aggregating over 60 on-chain and macro indicators—currently signaling strong market expansion.
"We are in the early phase of a typical BTC cycle, entering a period of strong expansion," Edwards said.
In summary, Edwards’ analysis anticipates a multi-month upward trend for BTC, despite potential volatility and pullbacks due to accelerated market developments in 2024 and the approaching next halving.
Edwards boldly asserts: "All indicators broadly agree that a very large multi-month rally is highly likely from here."
Edwards concludes: "The deep value in BTC is gone—the ship has sailed. You had two years to buy undervalued BTC."
"Instead, an exciting new chapter has begun—welcome to the BTC momentum era."
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