On-Chain Metrics Indicate that Bitcoin Is "Extremely Undervalued"

Even with its reputation for volatility, Bitcoin (BTC) appears to be undervalued relative to its network strength. Analysts who favor metrics that calculate intrinsic values based on verifiable blockchain activity rather than market sentiment have come to this conclusion.

These analytical models, similar to stock valuation methods, highlight how network health and usage do not align with its discounted price, making an argumentative case for long-term investments.

A Discount Is Indicated By the NVT Ratio

One of the key indicators often cited in cryptocurrency circles is the Network Value to Transactions Ratio (NVT Ratio). Similar to what’s done for stocks, NVT Ratio compares a network’s market capitalization (its “value”) with total transactions moving across blockchain (its utility or earnings).

Low NVT Ratio values indicate that transactional volumes–the value being secured and transferred–are higher relative to their market capitalization, suggesting undervaluation. Conversely, high NVT values may signal speculative bubbles. Recent analysis suggests that Bitcoin’s current NVT reading places it firmly within this undervaluation range, suggesting its price has yet to align with its fundamental utility delivered by its network.

Realized Value and Market Maturity.

MVRV Ratio further validates this claim of undervaluation. Realized Value estimates the worth of Bitcoin by recording each coin when last traded on blockchain - effectively measuring investors’ cost basis; MVRV therefore acts like a market-to-book value ratio.

Readings from this metric often reveal that Bitcoin’s current price is trading close to, or below, its total cost basis in the market. This phenomenon often marks major market bottoms or deep undervaluation as most “smart money” may currently be holding losses or slight profits and leaving room for price growth once sentiment shifts. Furthermore, its structural strength as evidenced through increasing institutional adoption (such as ETFs) and hash rate growth confirms its underlying network remains strong and makes this discount especially compelling to long-term investors.