A Bitcoin pricing model based on blockchain data suggests the cryptocurrency is currently trading near its “fair value,” meaning it is neither overvalued nor undervalued.
In a recent post on X, analyst Root provided an update using the On-chain Value Map, a valuation model he created. This model combines three key on-chain metrics: Realized Cap, Liquid Supply, and Coin Days Destroyed.
The “Realized Cap” calculates Bitcoin’s total value by assuming each token is worth the price at which it was last moved on the blockchain. Essentially, it reflects the total capital investors have used to buy the current supply of Bitcoin.
“Liquid Supply” tracks the portion of Bitcoin held by investors who frequently move their coins. This represents supply that is more likely to be sold or traded rather than held long-term.
“Coin Days Destroyed” (CDD) measures the resetting of “coin days” across the network. One Bitcoin accumulates one “coin day” for each day it remains untouched. When that Bitcoin is finally moved, its accumulated coin days are “destroyed,” and the counter resets to zero. Spikes in CDD can signal when long-term holders are starting to sell, as they have accumulated many coin days.
The chart for the On-chain Value Map, which combines these metrics, shows that Bitcoin surged above the “overvalued” level when it reached its all-time high in October. Since then, the price has declined back to the model’s “fair value” zone.
This suggests that, according to this model, Bitcoin is currently in a neutral valuation state. The next price direction remains to be seen.
Bitcoin’s price has been consolidating since its low in November, staying close to this fair value level. It is currently trading around $87,600.
Frequently Asked Questions
FAQs Bitcoins Price Fair Value According to OnChain Analysis
Beginner Questions
Q What does it mean that Bitcoins price is close to its fair value
A It means that according to a specific analytical model the current market price of Bitcoin is roughly in line with its estimated fundamental or intrinsic value rather than being significantly overvalued or undervalued
Q What is onchain analysis
A Onchain analysis is the study of data recorded on Bitcoins public blockchain It looks at metrics like transaction volume wallet activity and coin movement to understand investor behavior and network health
Q Why is this fair value assessment a big deal
A It can be a signal that the market is in a relatively balanced or rational state which may suggest reduced risk of a major price crash or indicate a solid foundation for future growth
Q Does this mean the price wont go down anymore
A No Close to fair value is a modelbased estimate not a guarantee Prices can still be volatile due to news regulations macroeconomic factors and shifts in market sentiment
Q As a new investor should I buy Bitcoin now based on this
A This analysis can be one helpful data point but it should not be your sole reason for investing Always do your own research understand the risks of volatility and never invest more than you can afford to lose
Intermediate Advanced Questions
Q Which specific onchain model suggests Bitcoin is at fair value
A Common models include the MVRV ZScore Realized Price and Network Value to Transactions Ratio The conclusion often comes from a combination of these metrics aligning with historical fair value zones
Q How reliable are these onchain fair value models
A They are historically insightful but imperfect They are based on past patterns and may not account for unprecedented future events or new types of market participants
Q What are the limitations of using onchain data for valuation
A It primarily reflects the behavior of existing holders and doesnt directly measure external demand from new investors entering via exchanges It also cant predict black swan