Is Bitcoin Overvalued? A Thermo Cap Ratio Analysis
Recent discussions in the crypto community have focused on whether Bitcoin is overvalued based on its network fundamentals. CryptoQuant CEO and founder, Ki Young Ju, recently shared insights on the Bitcoin Thermo Cap Ratio trends, shedding light on this topic.
Understanding the Thermo Cap Ratio
- Ki Young Ju introduced the concept of Thermo Cap, a capitalization model for Bitcoin.
- The Thermo Cap calculates the total value of BTC based on the spot price at the time of mining.
- Unlike the traditional market cap, which uses the current spot price, the Thermo Cap considers the value of all coins mined.
Implications of Thermo Cap on Bitcoin Value
- The Thermo Cap serves as a measure of true capital inflows into the Bitcoin network.
- It reflects the cumulative value of coins mined since the inception of the blockchain.
- It shows the increasing capital flowing into Bitcoin over time, as seen in the historical Thermo Cap chart.
Analyzing the Thermo Cap Ratio
- The Thermo Cap Ratio compares the Bitcoin market cap to the Thermo Cap.
- Historical trends indicate that high Thermo Cap Ratio values align with peaks in Bitcoin’s price.
- Conversely, low Thermo Cap Ratio values coincide with bottoms in BTC price, signaling potential buy opportunities.
Current BTC Price Movement
Bitcoin’s price has remained range-bound, hovering around $68,900 without breaking out decisively. This stability raises questions about its valuation based on network fundamentals.
Key Takeaways from Thermo Cap Analysis
While the Thermo Cap Ratio has been trending upwards, it has not reached levels indicative of previous bull run peaks. This suggests that Bitcoin may not be overvalued based on its network fundamentals, according to Ki Young Ju.
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