Bitcoin (BTC) has experienced a significant recovery, surpassing the $93,000 mark since last night. This rebound follows a sharp correction that saw BTC fall to the $83,000 level.
Amidst this rapid recovery, renowned economist Timothy Peterson has highlighted a noteworthy development concerning the BTC price.
Peterson pointed out that the recent downturn caused the BTC price to dip below its network value, as determined by the Metcalfe model, for the first time in two years.
According to Peterson's analysis, Bitcoin's price has fallen below its network value, calculated using Metcalfe's value model, for the first time in two months.
He further elaborated that such an event often signifies the concluding stages of market resets and precedes a Bitcoin recovery.
Bitcoin has fallen below its network value for the first time in two years. While this doesn't necessarily signal a bottom, it does suggest that much of the leverage has dissipated and the 'bubble' is deflating.
The analyst emphasized that Bitcoin's network value, as calculated by Metcalfe's law, serves as a reliable indicator for forecasting future price performance.
Peterson cited data indicating that the probability of a positive return is as high as 96% one year after the spot price drops below the Metcalfe value.
Historically, the Spot Price/Metcalfe Value ratio has been a strong predictor of Bitcoin's future performance. On days when the price falls below the Metcalfe value, it has historically resulted in a 96% probability of a positive return after one year, translating to an average gain of 132%.
It is worth noting that significant price recoveries followed when the BTC/USD pair fell below its fair value in 2019 and 2020. The most recent occurrence of this was in early 2023, prior to Bitcoin's surge of over 340%, which led it to its all-time high of $74,000 in March 2024.