Bitcoin (BTC) stands as one of the most disruptive financial innovations of the 21st century—a decentralized digital currency that operates independently of traditional banking systems and government control. As institutional and retail interest grows, a critical question emerges: Is Bitcoin under or overvalued? While short-term price movements are often driven by market sentiment and macroeconomic news, long-term investors increasingly turn to fundamental analysis to assess Bitcoin’s intrinsic value.
Unlike traditional assets such as stocks or bonds, Bitcoin does not generate cash flows, pay dividends, or have earnings. This makes conventional valuation models like discounted cash flow (DCF) ineffective. Instead, analysts rely on alternative metrics rooted in supply dynamics, network usage, miner economics, and investor behavior. This article explores five key fundamental indicators—Stock-to-Flow, Network Value to Transactions (NVT), Thermocap Multiple, MVRV, and Mayer Multiple—to determine whether Bitcoin is currently undervalued, overvalued, or fairly priced.
Understanding Fundamental Analysis in Crypto
Fundamental analysis (FA) aims to uncover an asset’s intrinsic value—what it’s truly worth based on underlying economic and technical factors—rather than its current market price. In traditional finance, FA examines revenue, profit margins, balance sheets, and industry trends. For Bitcoin, the approach must adapt.
Bitcoin’s value stems from its scarcity, security, decentralization, and increasing adoption as a store of value—often compared to digital gold. Because it lacks cash flows, analysts focus on on-chain metrics, monetary policy, and network activity to estimate fair value. These tools help identify potential mispricings between market sentiment and real-world utility.
However, fundamental analysis in crypto is still evolving. Each model has strengths and limitations. No single indicator offers a definitive answer—but together, they paint a more complete picture.
1. Stock-to-Flow: Scarcity as Value
One of the most influential Bitcoin valuation models is Stock-to-Flow (S2F), popularized by pseudonymous analyst PlanB. The model hinges on scarcity: the ratio of existing supply ("stock") to new annual supply ("flow").
S2F = Total Current Supply / Annual New Supply
As of early 2025, approximately 19.83 million BTC are in circulation, with around 164,250 new BTC created annually post-halving. This yields a stock-to-flow ratio of:
19,830,000 ÷ 164,250 ≈ 120.7
This means it would take over 120 years of current production to match the existing supply—a level comparable only to gold (S2F ~60). The higher the S2F, the scarcer the asset, and theoretically, the higher its value.
Bitcoin’s halving events—occurring roughly every four years—cut block rewards in half, reducing inflation and increasing scarcity. This deflationary mechanism drives S2F upward over time.
According to the S2F model, Bitcoin’s intrinsic value is currently around $117,219**, significantly above its market price of ~**$80,606. This suggests Bitcoin may be undervalued based on scarcity alone.
Critics argue S2F ignores demand and assumes perfect market efficiency. Yet historically, BTC price has closely tracked S2F trends after major halvings, lending credibility to its predictive power.
2. Network Value to Transactions (NVT): Is Usage Justifying Price?
The Network Value to Transactions (NVT) ratio evaluates whether Bitcoin’s market cap aligns with actual on-chain transaction volume—similar to the P/E ratio in stocks.
NVT = Market Cap / Daily Transaction Value (USD)
A high NVT suggests the network is overvalued relative to usage; a low NVT indicates undervaluation.
A refined version—NVT Signal (NVTS)—uses a 90-day moving average of transaction volume to smooth out volatility:
NVTS = Market Cap / 90-Day MA of Daily Transaction Value
Historically, Bitcoin’s NVTS ranges between 40 (overbought) and 20 (oversold). When NVTS spikes above 40, it often precedes price corrections. When it dips near 20, buying opportunities tend to emerge.
Currently, NVTS sits in the mid-range—neither extremely high nor low—indicating that Bitcoin is fairly valued relative to its transactional utility. This contradicts the bullish signal from S2F and suggests caution for investors expecting immediate upside.
👉 Track real-time NVT and other on-chain metrics with advanced analytics tools.
3. Thermocap Multiple: Valuing Miner Revenue
Thermocap measures the cumulative value paid to Bitcoin miners through block rewards and transaction fees since inception. The Thermocap Multiple compares current market price to this historical cost base.
Miners secure the network and are essential to Bitcoin’s operation. If prices fall too far below what miners were historically paid, mining becomes unprofitable—threatening network security. Conversely, large premiums suggest speculative overheating.
Currently, the Thermocap Multiple hovers around 120, well below previous peaks of 200–500 during bull runs. This implies there’s room for price appreciation before miners are overcompensated.
The metric acts as a proxy for network health and long-term sustainability. A rising multiple signals growing confidence; a falling one may warn of capitulation.
4. MVRV Ratio: Investor Profitability & Market Cycles
MVRV (Market Value to Realized Value) compares Bitcoin’s market cap to its realized cap—the sum of all coins valued at their last movement price.
- Market Cap: Total supply × current price
- Realized Cap: Each coin × price when last moved
This adjustment removes lost or dormant coins from valuation, offering a clearer picture of actual investor cost basis.
MVRV = Market Cap / Realized Cap
When MVRV > 3.7, investors are sitting on massive profits—often a sell signal. When MVRV < 1, holders are underwater—typically a bottoming indicator.
Today’s MVRV is moderate, sitting between historical buy and sell zones. It suggests neither extreme fear nor greed—just a neutral market phase with potential for either direction.
5. Mayer Multiple: Timing the Cycle
Developed by Bitcoin advocate Trace Mayer, the Mayer Multiple divides the current BTC price by its 200-day moving average.
Mayer Multiple = Current Price / 200-Day MA
Key thresholds:
- Below 0.5: Deep bear market—strong buy signal
- Above 2.3: Bubble territory—time to consider selling
At 0.99, Bitcoin is slightly below its long-term average and trending downward. This hints at further downside risk in the short term but doesn’t signal panic.
The Mayer Multiple excels at identifying cyclical extremes—not precise entry points.
Frequently Asked Questions (FAQ)
Q: Can fundamental analysis predict Bitcoin’s exact price?
A: No model can pinpoint an exact price. Instead, fundamental indicators provide probabilistic ranges and context about whether Bitcoin is relatively cheap or expensive compared to its historical behavior and underlying metrics.
Q: Why doesn’t discounted cash flow (DCF) work for Bitcoin?
A: DCF relies on future cash flows, which Bitcoin doesn’t produce. Unlike companies that generate revenue or pay dividends, Bitcoin’s value comes from scarcity, adoption, and network effects—not income generation.
Q: Which fundamental model is most reliable?
A: There’s no consensus. Stock-to-Flow emphasizes scarcity; NVT focuses on utility; MVRV reflects investor psychology. Combining multiple models offers better insight than relying on any single one.
Q: Are these indicators useful during bear markets?
A: Yes—especially MVRV and Mayer Multiple, which help identify capitulation points. In contrast, S2F remains bullish long-term regardless of cycle phase.
Q: How often should I check these metrics?
A: Weekly or monthly reviews are sufficient for long-term investors. Traders may monitor them daily alongside technical indicators.
Q: Does on-chain data account for lost bitcoins?
A: Partially. Metrics like Realized Cap reduce the impact of dormant coins by valuing them at their last movement price—but exact loss estimates remain uncertain.
Final Thoughts: Mixed Signals Demand Caution
The fundamental landscape for Bitcoin presents a mixed outlook:
- Bullish: Stock-to-Flow and Thermocap suggest undervaluation.
- Neutral: MVRV and Mayer Multiple show balanced conditions.
- Bearish: NVT indicates price may be ahead of actual usage.
With no clear consensus among indicators, investors should avoid overreliance on any single model. Instead, use these tools collectively to build conviction over time.
Market timing is difficult—even with robust analysis. A strategic approach combining fundamentals, technicals, and macro trends often yields better results than waiting for a “perfect” signal.
👉 Stay ahead with real-time data and expert insights to navigate Bitcoin’s next cycle confidently.