Woofun AI data shows that Bitcoin’s rate-adjusted valuation ratios remain below their peaks from the 2020–2021 cycle. Despite record-high prices, the underlying appeal is weaker than during the previous bull run when interest rates were near zero.

Closing this valuation gap requires either a sharp decline in interest rates or a significant correction in asset prices. The Federal Reserve maintains a hawkish stance to combat persistent inflation, while strong international oil prices add to cost pressures. This combination could lead to a reacceleration of cost-driven inflation, potentially triggering a sharp price correction for Bitcoin as markets adjust to higher-for-longer interest rates.