SEOUL — As the cryptocurrency market grapples with continued volatility, a prominent on-chain analyst has stepped forward with data suggesting that the worst of the Bitcoin correction may be nearing its end. Ki Young Ju, CEO of analytics firm CryptoQuant, has identified $56,000 as a pivotal support level, citing network valuation metrics.
The analysis offers a data-driven perspective on Bitcoin’s recent price action, countering fears of a deeper capitulation event by highlighting the strength of the network’s underlying fundamentals.
The NVM Ratio Signal
In a market update shared this week, Ki Young Ju utilized the Network Value to Metcalfe (NVM) Ratio to forecast the potential floor for Bitcoin’s price. The NVM ratio is a valuation metric that compares Bitcoin’s market capitalization to its network utility, specifically measuring the square of daily active addresses.
According to Ju’s data, Bitcoin is currently testing the lower bounds of a valuation channel that has historically dictated price action during bull cycles.
“If the bull market is still intact, Bitcoin should hold the $56,000 level,” Ju stated. He noted that this specific price point correlates with the lower band of the NVM ratio, a zone that has historically acted as strong support when the asset is undervalued relative to its user activity.
Valuation vs. Price Action
The core of the analysis rests on the relationship between price and network usage. The NVM ratio suggests that while the market price (market cap) may fluctuate due to speculation, the “fair value” based on the number of people actually using the network (Metcalfe’s Law) provides a hard floor.
Ju’s charts indicate that when Bitcoin’s price approaches this lower valuation band, it typically signals a local bottom, presenting a risk-reward ratio that favors buyers. With the level currently sitting at $56,000, the data implies that further downside could be limited unless there is a catastrophic drop in network activity.
Market Context
This technical outlook comes at a crucial time for investors. Bitcoin has faced significant sell pressure recently due to macroeconomic headwinds and outflows from spot ETFs. The fear of a drop below the psychological $60,000 barrier has kept sentiment bearish.
However, the CryptoQuant analysis suggests that the current correction is a standard realignment with network fundamentals rather than a trend reversal. By anchoring the price to the $56,000 NVM support, the data indicates that the asset remains in a macro uptrend, provided active address numbers remain stable.
ongoing Monitoring
While the $56,000 target provides a theoretical floor, analysts caution that on-chain metrics are probability indicators, not guarantees. Market participants continue to watch macroeconomic data and institutional flows closely to see if this technical support will hold in the coming weeks.
