Bitcoin's On-Chain Data Signals Fundamentals-Driven Bull Market Shift → Insights

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Briefing

Bitcoin’s market is fundamentally shifting towards a more mature, institution-driven bull market. This suggests current price movements are increasingly supported by genuine utility and long-term accumulation. The most important data point proving this thesis is that approximately 74% of circulating Bitcoin is now illiquid, held by long-term investors, creating a significant supply squeeze.

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Context

Many in the crypto market wonder if Bitcoin’s recent price action is sustainable, or if it is merely another speculative bubble. Investors seek clarity on whether the market’s foundation is strengthening with real utility and institutional backing, or if it remains vulnerable to short-term retail-driven hype.

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Analysis

The Network Value to Transactions (NVT) ratio measures Bitcoin’s valuation against its transactional utility. A low NVT suggests undervaluation relative to network use. A high NVT can signal speculative overdrive. The current NVT ratio of approximately 1.51 indicates a healthy balance.

Real-world usage increasingly supports price, indicating a move away from short-term trading activity. This pattern, combined with 74% of Bitcoin’s supply becoming illiquid due to long-term holding and institutional accumulation, signals a tightening supply environment. This shift confirms that demand is outpacing available supply, leading to the conclusion of a fundamentals-driven bull market.

Parameters

Key Metric – NVT Ratio → ~1.51
Illiquid Supply → 74% of circulating BTC
Dormant Supply → ~75% of coins dormant for over six months
MVRV Z-Score Rebound → From 1.43
Projected Price Target → $190,000 by Q3 2025

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Outlook

This insight suggests that Bitcoin is likely entering a sustained growth phase, underpinned by strong fundamentals and institutional confidence. Investors should monitor the continued accumulation by long-term holders and the stability of the NVT ratio above 1.5 to confirm this trend. A counter-signal to watch for would be a significant increase in liquid supply or a sharp drop in the NVT ratio, which could indicate renewed speculative selling pressure.

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Verdict

Bitcoin’s market is transitioning to a robust, fundamentals-driven bull phase, supported by increasing illiquid supply and institutional adoption.

Signal Acquired from → ainvest.com