Bitcoin Fundamentals Suggest Potential for Further Gains Amid Cautious Market Sentiment and On-Chain Signals

• Bitcoin’s fundamentals remain robust as key on-chain metrics indicate sustained momentum and undervaluation despite recent price rallies above $100K.

• Investor behavior shows increased long-term holding and reduced short-term selling pressure, suggesting confidence amid cautious market sentiment.

• According to COINOTAG, “The combination of rising exchange outflows and subdued short-term holder activity points to a healthy accumulation phase rather than speculative excess.”

Bitcoin’s strong fundamentals, undervaluation signals, and holding trends support continued upside potential despite negative sentiment and short-term risks.

MVRV Ratio Indicates Bitcoin Has Not Reached a Bull Market Peak

The Market Value to Realized Value (MVRV) ratio currently stands at 2.25, significantly below historical bull market peaks, even as Bitcoin trades above $104K. This metric serves as a critical gauge of market valuation relative to realized prices, with elevated levels historically coinciding with market tops.

The sustained lower MVRV suggests that Bitcoin’s current price action is underpinned by fundamental strength rather than speculative frenzy. This implies room for further appreciation as the market has yet to enter euphoric territory typically characterized by overheated valuations.

Source: IntoTheBlock/X

Negative Sentiment Reflects Market Skepticism but Supports Potential Upside

Bitcoin’s Weighted Sentiment metric has declined to -0.723, indicating pervasive skepticism among traders despite the ongoing rally. This negative sentiment typically signals doubt about the sustainability of price gains.

However, from a contrarian perspective, such sentiment can be a bullish indicator. When market participants remain doubtful, profit-taking is less aggressive, reducing resistance to further price increases. This dynamic can foster a more durable uptrend as the rally progresses.

Source: Santiment

BTC NVT and Puell Multiple Signal Undervaluation and Healthy Network Activity

The Network Value to Transactions (NVT) Golden Cross and Puell Multiple have both decreased by over 23% and 25%, respectively, indicating that Bitcoin’s price has yet to fully reflect underlying on-chain fundamentals.

These metrics suggest that miner profitability remains stable and network activity is steady, without signs of overheating or speculative excess. This environment favors value-driven growth and supports the thesis that Bitcoin remains undervalued relative to its fundamental indicators.

Source: CryptoQuant

Increasing Exchange Outflows Indicate Growing Long-Term Holding

On-chain data reveals a 10.72% increase in Bitcoin outflows from exchanges alongside a 10.27% decline in inflows. This trend implies that investors are withdrawing Bitcoin from exchanges, likely moving assets into cold storage or wallets for long-term holding.

This behavior reduces immediate selling pressure and often precedes supply constraints that can amplify upward price momentum. The pattern reflects growing confidence among holders and supports a bullish outlook for Bitcoin’s medium-term trajectory.

Source: CryptoQuant

Short-Term Holders Remain Inactive, Reducing Immediate Selling Pressure

Realized Cap HODL Waves data shows that short-term holder activity (0d–1d) is at a notably low level of 0.278 during this bullish phase. This contrasts with typical market rallies where short-term holders often realize profits, increasing selling pressure.

The current subdued activity suggests that short-term holders are refraining from selling, which helps maintain upward price momentum by limiting overhead resistance. This dynamic favors sustained gains driven by long-term holders and institutional participants.

Source: Santiment

Leverage Dynamics at Critical Levels Could Influence Next Market Move

Binance’s Liquidation Map reveals a significant cluster of long liquidations just below the $104K price level. A breach below this support could trigger forced sell-offs, escalating volatility and potentially sparking a short-term correction.

Conversely, a breakout above this threshold may induce a short squeeze, as numerous short positions are concentrated just above current prices. This interplay of leverage positions creates a pivotal juncture where market direction could be decisively influenced by margin calls and liquidation cascades.

Source: Coinglass

Conclusion

Bitcoin’s current rally above $100K is underpinned by strong fundamental indicators, including undervaluation metrics and growing long-term holding trends. Despite prevailing negative sentiment and potential short-term liquidation risks, the market exhibits characteristics of a healthy, sustainable uptrend rather than speculative excess.

Investors should monitor leverage dynamics closely, as margin positions near critical price levels could precipitate volatility. Overall, the data supports a cautiously optimistic outlook, with Bitcoin’s fundamentals providing a solid foundation for continued growth.