On-chain data shows that the Bitcoin Network Value to Transactions (NVT) Golden Cross still has a high value, a sign that could be bearish for BTC.
Bitcoin NVT Golden Cross is still close to the historical upper zone
In a CryptoQuant summary publishan analyst discussed the recent NVT Golden Cross trend for BTC and its implications for the price.
O NVT Ratio is an indicator that tells us how Bitcoin’s market value compares to its transaction volume. The metric is generally used to judge whether the asset’s price is fair or not at the moment.
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When the value of the indicator is high, it suggests that the value of the network (i.e. the market value) is high compared to its ability to transact currencies (the volume). Such a trend implies that the asset may be currently overpriced.
On the other hand, the low metric means that the cryptocurrency’s price may be undervalued due to a rally since the market cap is low compared to the volume.
In the context of the current topic, the NVT index itself is not of interest; rather, it is a modified form called NVT Golden Cross. This metric compares the short-term trend (the 10-day moving average) with the long-term trend (30-day MA) of the NVT index to identify tops and bottoms.
Here is a chart showing the trend of this Bitcoin indicator over the last two years:
On the chart, the quant highlighted the two relevant zones for Bitcoin NVT Golden Cross. It appears that when this metric is above 2.2, a top may be likely for the cryptocurrency as its price is overvalued in this zone. Likewise, NVT Golden Cross below -1.6 could lead to a bottom formation for the asset.
Bitcoin NVT Golden Cross has ventured into red territory in recent months. Each time there was a decline outside the zone, it was followed by another increase into the zone. As such, he has not yet managed to visit the high region.
Currently, the metric has just left the upper zone, but its value is still quite close. So, while a top may not be especially likely now, a lasting upward trend is also unlikely to occur.
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It is possible that Bitcoin is not completely out of the danger of seeing more price declines until the NVT Golden Cross can see a decrease in the green zone.
It now remains to be seen how the indicator will develop in the near future and whether its changes will affect the price of BTC.
BTC Price
At the time of writing, Bitcoin is floating around the $64,900 mark, up more than 4% over the past week.
Featured image by Bastian Riccardi on Unsplash.com, CryptoQuant.com, chart from TradingView.com