Bitcoin’s recent price action has continued its upward trajectory, with the asset trading as high as above the $120,000 price mark in the past 24 hours. The move suggests persistent bullish momentum following a period of sharp decline earlier this week.
As the price inches closer to its all-time high, on-chain data is starting to paint a picture of solid transactional support behind the price movement. In particular, analysts have begun highlighting a divergence between Bitcoin’s market value and its underlying network activity.
One such observation comes from CryptoQuant analyst Sunflowr Quant, who shared insights in a recent QuickTake post examining the unusual behavior of the NVT Golden Cross indicator.
This metric, typically expected to rise in tandem with price due to its function as a ratio between market cap and transaction volume, is currently declining, which Sunflowr attributes to a significant uptick in on-chain activity.
Bitcoin On-Chain Growth Suggests Underlying Network Strength
According to Sunflowr, this inverse correlation between the rising BTC price and falling NVT Golden Cross may indicate that the current rally is driven more by actual usage and real transactions on the Bitcoin network rather than speculative trading.
“A decline in the NVT ratio during a price increase implies that the transaction volume is rising at a faster pace than the market cap,” he wrote. “This can be interpreted as a sign that the rally is supported by real economic activity.”
This observation aligns with the broader sentiment that healthy on-chain growth can serve as a foundation for more sustainable price increases. If transaction volumes are growing organically and not solely from derivatives speculation, it suggests that user adoption and financial utility are contributing to the price strength.
Investors closely watching these indicators may find this a favorable environment, though caution remains as other metrics hint at evolving market dynamics.
Holder Rotation Signals Potential Shift in Market Participation
A separate analysis from CryptoQuant analyst IT Tech sheds light on another dimension of Bitcoin’s current market structure: holder behavior.
In a post titled “Holder Rotation,” IT Tech notes that long-term holders, those who have held BTC for more than 155 days, have recently begun net distribution, meaning they’re selling more than accumulating.
Conversely, short-term holders are showing net accumulation behavior once again, a dynamic often seen in late-stage rallies. This shift between long-term and short-term holders has historically served as a warning signal.
Similar handoffs were observed in April 2021 and November 2023, both of which preceded local tops or cooling phases. While this doesn’t necessarily confirm a reversal, it highlights the need to monitor supporting metrics such as exchange inflows and funding rates.
“It’s a classic profit-taking pattern from seasoned wallets, while newer market participants may be entering due to rising prices,” IT Tech wrote.
Featured image created with DALL-E, Chart from TradingView
