Bitcoin (BTC) has been in a downtrend since early October, with the price dropping below its network value, suggesting a possible recovery in 2026.
Key takeaways:
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Bitcoin price dropped below its fair value, a setup that has historically preceded positive one-year returns.
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Strengthening network activity suggests robust adoption beyond speculation.
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Bitcoin spot CVD flipped positive, signalling renewed buy-side activity.
Bitcoin’s network value hints at BTC price recovery
Bitcoin price is trading 31.4% below its $126,000 all-time high reached on Oct. 6, according to data from Cointelegraph Markets Pro and TradingView.
This drawdown has seen the BTC price drop below its network value (Metcalfe) for the first time in two years, a setup that has historically predicted Bitcoin recoveries with accuracy, according to economist Timothy Peterson.
Related: Bitcoin battles $50K price target as Fed adds $13.5B overnight liquidity
Bitcoin’s Metcalfe Value is the theoretical fair price derived from Metcalfe’s Law, which states that the BTC price rises in correlation with the growth of active addresses and transactions, i.e., network value. This means that the more wallets and transactions there are, the higher the fair price of Bitcoin.
This divergence signals Bitcoin is undervalued relative to its expanding network (e.g., active addresses), often after speculative excess.
“While this does not necessarily signal a bottom, it does indicate that most leverage has been removed and the ‘bubble’ has deflated,” Peterson said in an X post on Tuesday, adding:
“Price to Metcalfe Value has been a good indicator of future performance. On any given day, when price is below the Metcalfe, performance is positive one year later 96% of the time.”
Notably, when the BTC/USD pair dropped below its fair value in 2019 and 2020, the price saw significant price recoveries in the months that followed. The last time this happened was in early 2023, preceding a more than 340% BTC price rally to its previous all-time highs of $74,000, reached in March 2024.
Bitcoin recovery odds appear strong, with network growth intact, as evidenced by a sharp increase in the number of investors who have held BTC for more than six months.
Hope. The first uptick in 6M holders since the April lows. pic.twitter.com/vFijIByTZI
— Charles Edwards (@caprioleio) December 2, 2025
Additional data from Nansen reveals that the number of transactions on the Bitcoin network has increased by 15% over the last seven days to 3.06 million, a bullish sign of adoption and utility.
Looking to 2026, a convergence of factors, including persistent institutional buying and macroeconomic tailwinds such as Fed easing, could drive BTC back above the Metcalfe’s value trendline by mid-year, targeting new all-time highs.
Bitcoin spot activity shows signs of recovery
Spot market data is also supporting the case for BTC’s recovery.
Spot CVD (cumulative volume delta, a metric measuring the difference between buying and selling volume over time.) has reversed from -$106.6 million to $29 million over the last week, according to data from Glassnode.
This signals “stronger buy-side flow and a shift toward improving sentiment,” said the onchain data provider in its latest Weekly Market Impulse report, adding:
“With CVD turning positive for the first time in several weeks, it signals renewed buy-side aggression despite thinning liquidity.”
As Cointelegraph reported, Bitcoin needs to regain momentum with higher trading volumes and sustained recovery in spot CVD for BTC to return to six figures.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
