There are a number of on-chain metrics that can be used to ascertain whether Bitcoin markets are bullish or bearish. Its energy value, in particular, could be signaling a bigger move ahead for BTC.
The Bitcoin Energy Value model was hypothesized by analyst and asset manager Charles Edwards, who asserted that Bitcoin’s fair value is a function of energy input, supply growth rate, and a constant representing the fiat dollar value of energy.
Edwards has noted that using this metric, Bitcoin appears to be overvalued for the first time since September 2019. He added that this could be good news because,
When EV bottoms and trends up, it is often a BIG up trend. Particularly after halving. We are already getting signs of daily EV greater than price. If this continues, expect fast recovery.
In the previous bull markets of 2013 and 2017, there were huge runs on BTC price without a corresponding increase in energy used.
Illustrations by A. Gnetova and G. Phan