Bitcoin Valuation Metric Indicates 96% Chance of BTC Price Recovery by 2026

Bitcoin valuation metric projects 96% chance of BTC price recovery in 2026

Summary:
Bitcoin is currently facing a downward trend, having dropped below its network value. However, historical patterns suggest a potential recovery ahead in 2026. Important metrics point to deeper adoption, increased activity, and stronger buying signals, which could lead to significant price improvements in the near future.

Key Takeaways:

Bitcoin has fallen below its fair value, which has often preceded positive annual returns in the past.
Increasing network activity indicates growing adoption beyond mere speculation.
A change in Bitcoin's spot CVD (Cumulative Volume Delta) shows a resurgence in buying activity.

Insights on Bitcoin’s Network Value and Possible Price Recovery

Bitcoin is currently trading 31.4% lower than its all-time high of $126,000, which was reached on October 6. This decline has resulted in the price falling beneath its network value, also known as its Metcalfe value, for the first time in two years. According to economist Timothy Peterson, this situation often signals an impending recovery for Bitcoin.

Bitcoin's Metcalfe Value is based on Metcalfe’s Law, which suggests that the price of Bitcoin increases as the number of active addresses and transactions on its network grows. In other words, as more wallets are created and transactions occur, the fair price for Bitcoin rises.

This discrepancy implies Bitcoin is currently undervalued compared to its expanding network—which encompasses the growing number of active addresses—often following speculative bubbles.

“While this doesn’t directly indicate a market bottom, it does suggest that excessive leverage has been removed and the speculative bubble has deflated,” Peterson noted in a post on X.

BTC price compared to Metcalfe Value. Source: Timothy Peterson

Historically, there have been notable price recoveries after the BTC/USD pair dipped below its fair value, notably during 2019 and 2020. The most recent occurrence was earlier this year, leading to a more than 340% rally that saw the price reach previous highs of $74,000 in March 2024.

Hope is on the horizon as the number of investors holding Bitcoin for longer than six months has started to increase again, marking the first uptick since April's lows.

“First uptick in 6M holders since the April lows.”
— Charles Edwards (@caprioleio)

Additional data from Nansen shows that Bitcoin transactions on the network rose by 15% over the past week, reaching 3.06 million, which is a promising sign of adoption and utility.

Bitcoin transaction count. Source: Nansen

Looking ahead to 2026, various factors—including sustained institutional buying and macroeconomic improvements like Federal Reserve easing—could push Bitcoin above its Metcalfe value trendline by mid-year, potentially leading to new all-time highs.

Strengthening Signs in Bitcoin’s Spot Market Activity

Recent data from the spot market offers additional support for Bitcoin's potential recovery. The spot CVD (Cumulative Volume Delta)—the metric tracking the difference between buying and selling volumes—has experienced a turnaround from -$106.6 million to a positive $29 million over the past week, as reported by Glassnode.

This indicates a strong uptick in purchasing activity and a shift towards more favorable market sentiment, according to Glassnode's latest Weekly Market Impulse report.

Bitcoin spot CVD. Source: Glassnode

As Cointelegraph noted, for Bitcoin to reach the six-figure mark, it needs to regain momentum through increased trading volumes and a sustained recovery in its spot CVD.