CryptoQuant CEO, a firm that provides on-chain analysis of Bitcoin network data, explained the price was not currently too high.
Bitcoin price may not be overvalued yet based on thermo cap ratio
It’s a brand new world post On X, Ki Young Ju, CEO of CryptoQuant and its founder discussed the current trend for the Bitcoin Thermo Cap Ratio. The “Thermo CapThe ” capitalization model” for BTC calculates total asset value by taking the value of each token as equal to the spot price at the time it was mined.
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This model is a way to calculate the value of all the coins that have been mined since the beginning of blockchain. It is different than, say, what the traditional market cap does. The market cap is calculated by taking the spot price of the coins as the total value.
The Thermo Cap can be viewed as a measure for the supply of bitcoins, since the miners are the sole source that increases the amount. “true” capital inflows Joining the network.
The chart below shows the evolution of Bitcoin Thermo Cap over time:
The graph above shows that ThermoCap has experienced a rapid growth curve. It is no surprise that the amount of money invested in the asset has increased over time.
The Thermo cap Ratio is the more relevant indicator in the context of this topic. This metric measures the relationship between the Bitcoin Market Cap and Thermo Cap.
The graph below illustrates the Thermo cap Ratio’s trend over time.
The graph shows an interesting pattern. The graph shows that high Thermo Cap Ratio values have coincided very well with the high prices of cryptocurrency.
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The Bitcoin Market Cap is large in comparison to Thermo Cap at high prices, which means coins are traded at a higher price than what they were initially mined.
The ratio is also a good indicator of BTC bottoms. Indicator values have been rising in recent months, although they are not at the highs where previous bull runs would be. “Bitcoin is not currently overvalued based on network fundamentals,” CryptoQuant Founder notes
BTC price
Bitcoin is unable to escape its recent range as the price of bitcoin has remained sideways. BTC trades currently at approximately $68,900.
Charts from TradingView.com and Dall-E.
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Source: www.newsbtc.com