Bitcoin's Bull Run: Evaluating the Sustainability of the Current Momentum Amid Institutional Caution and On-Chain Signals

The current Bitcoin bull run, fueled by a $16,000 breakout in late 2022 and sustained by on-chain metrics, has sparked a schism between retail exuberance and institutional caution. Retail investors, driven by fear of missing out (FOMO), have flocked to Bitcoin as a speculative asset, while institutions remain wary of macroeconomic headwinds and regulatory uncertainties. This divergence raises a critical question: Is Bitcoin's momentum rooted in structural fundamentals, or is it a liquidity-driven bubble waiting to burst?

Contrarian On-Chain Analysis: MVRV and NVT as Contradictory Narratives

Bitcoin's Market Value to Realized Value (MVRV) ratio currently stands at 2.3x, a level historically associated with strong bull markets. This metric, which compares Bitcoin's market cap to the total cost basis of all on-chain holdings, suggests that long-term holders (LTHs) are sitting on 230% unrealized gains, while short-term holders are up 13%. A MVRV above 1 indicates a market where most participants are profitable, but values above 3.7 signal euphoria. At 2.3x, Bitcoin is in a “healthy bull phase,” with LTHs showing no signs of panic selling.

However, the Network Value to Transactions (NVT) ratio tells a different story. At 1.51, Bitcoin's NVT is well below the speculative bubble threshold of 2.2, suggesting its valuation is supported by real-world transactional demand rather than speculative fervor. Yet, the NVT Golden Cross—a refined version of the metric—has been trending upward and is now at 1.98, nearing the 2.2 resistance level. Historically, this threshold has preceded local tops and short-term corrections. While this does not invalidate Bitcoin's long-term fundamentals, it signals a potential consolidation phase as the market digests recent gains.

Behavioral Economics: Retail FOMO vs. Institutional Prudence

Retail investors, enamored by Bitcoin's 2023–2024 rally, have treated it as a speculative asset akin to meme stocks. This FOMO-driven behavior is evident in the surge of stablecoin inflows into exchanges and the proliferation of leveraged trading. However, institutional investors, who dominate the long-term holder cohort, remain cautious. Their behavior is reflected in the 74% illiquid supply (coins dormant for ≥2 years) and 75% of the supply inactive for over six months, which indicate a tightening liquidity environment.

The $16,000 breakout in late 2022 was a pivotal moment. On-chain data showed the MVRV ratio dropping below 1, signaling undervaluation, while the NVT ratio broke out of its fair value range. These metrics confirmed a structural shift: Bitcoin was transitioning from a speculative asset to a store of value. Yet, retail FOMO has since inflated expectations, creating a disconnect between on-chain fundamentals and retail sentiment.

Was the $16,000 Breakout Sustainable?

The $16,000 breakout was not a liquidity-driven bubble but a value normalization event. During this period, Bitcoin traded at its electrical cost for two months, a global price floor. The MVRV ratio's convergence with its 365-day moving average and the NVT ratio's normalization signaled a market bottom. The subsequent 40% short squeeze in January 2023, which pushed Bitcoin above $21,000, was a high-probability bullish signal.

However, the current price range of $112,668.95 to $118,657.68 in August 2025 suggests a maturing market. While the ROI is modest at 0.064%, the broader narrative of Bitcoin's adoption and scarcity remains intact. The 2024 halving, which reduced daily issuance to 900 BTC, has tightened supply, and institutional forecasts project prices of $150,000–$200,000 by late 2025.

Investment Outlook: Balancing Optimism and Caution

For investors, the key lies in structural market dynamics. Bitcoin's on-chain metrics—MVRV and NVT—indicate a fundamentally sound market, but short-term volatility is inevitable as the NVT Golden Cross approaches 2.2. Here's how to position:

1. Long-Term Holders (LTHs): Continue to accumulate during dips, as the 74% illiquid supply ensures scarcity-driven price resilience.
2. Retail Investors: Avoid overleveraging. Use the NVT Golden Cross as a sell signal if it breaches 2.2, but remain bullish on the broader trend.
3. Institutions: Monitor macroeconomic shocks (e.g., interest rate hikes) and regulatory developments. The current 30–50% correction potential is a risk, but the 2024 halving and ETF inflows provide a floor.

Conclusion: A Maturing Market, Not a Bubble

Bitcoin's bull run is underpinned by on-chain fundamentals and structural scarcity, not speculative mania. While retail FOMO has inflated short-term expectations, the interplay of MVRV and NVT metrics suggests a market in transition—from speculative trading to utility-driven value. Investors who align with the long-term narrative—tightening supply, institutional adoption, and macroeconomic tailwinds—will likely outperform those chasing short-term volatility.

In the end, Bitcoin's sustainability hinges on its ability to balance retail exuberance with institutional pragmatism. The current momentum is not a bubble but a maturation phase, where the market is learning to price Bitcoin not as a speculative asset, but as a digital store of value.