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On-chain data shows the Bitcoin Network Value to Transactions (NVT) Golden Cross is currently showing a trajectory that could suggest a bearish outcome for the BTC price.
Bitcoin NVT Golden Cross Is Near Overheated Territory Right Now
As explained by an analyst in a CryptoQuant Quicktake post, the NVT Golden Cross has a high value at the moment. The “NVT Ratio” is an on-chain indicator that keeps track of the ratio between the Bitcoin market cap and transaction volume.
The market cap here is simply the total value of the cryptocurrency’s circulating supply at the current spot price, while the transaction volume is a measure of the total amount of the asset that’s becoming involved in transfer activities on the network.
When the value of the NVT Ratio is high, it means BTC’s value (that is, the market cap) is high compared to its ability to transact coins (the transaction volume). Such a trend can be a sign that the coin is overvalued.
On the other hand, the metric being low suggests the cryptocurrency’s price could be due a rebound to the upside, as the market cap isn’t overheated compared to the volume.
In the context of the current topic, a modified form of the NVT Ratio known as the NVT Golden Cross is the indicator of interest. The NVT Golden Cross is a metric similar to the Bollinger Bands, which compares the short-term trend of the NVT Ratio against its long-term one to determine whether a top or bottom is near. The indicator uses the 10-day moving average (MA) for the short-term trend and the 30-day MA for the long-term one.
Now, here is a chart that shows the trend in the Bitcoin NVT Golden Cross over the past year:
As displayed in the above graph, the Bitcoin NVT Golden Cross recently touched a high value. The indicator’s rise was so sharp that it entered into a special zone past the 2.2 mark.
In this region, the asset’s price has often formed some sort of top. The same also held true during the visit into the zone this time around, with BTC’s price witnessing a bearish reversal.
As the coin’s price has gone through a retrace in the past week, the metric has also cooled off. Despite the decline, however, its value still remains relatively high. As the quant notes,
Currently, the NVT indicates that the pullback is likely to continue and that the recent price rise was driven by manipulation. For the upward trend to be sustainable, transaction volumes on the network must increase.
Historically, bottoms have tended to occur when the Bitcoin NVT Golden Cross has gone under the -1.6 mark. So far, the indicator has only dropped to 1.8, meaning that it still has quite the ways to go before it enters into this region.
BTC Price
At the time of writing, Bitcoin is trading around $83,300, down almost 6% in the last seven days.
Featured image from Dall-E, CryptoQuant.com, chart from TradingView.com
Keshav is currently a senior writer at NewsBTC and has been attached to the website since June 14, 2021.
Keshav has been writing for many years, first as a hobbyist and later as a freelancer. He has experience working in a variety of niches, even fiction at one point, but the cryptocurrency industry has been the longest he has been attached to.
In terms of official educational qualifications, Keshav holds a bachelor’s degree in Physics from one of the premier institutes of India, the University of Delhi (DU). He started the degree with an aim of eventually making a career in Physics, but the onset of COVID led to a shift in plans. The virus meant that the college classes had to be delivered in the online-mode and with it came free time for him to explore other passions.
Initially only seeking to make some beer money, Keshav unexpectedly landed clients offering real projects, after which there was no looking back. Writing was something he had always enjoyed and to be able to do it for a living was like a dream come true.
Keshav completed his Physics degree in 2022 and has been focusing on his writing career since, but that doesn’t mean his passion for Physics has ended. He eventually plans to re-enter university to obtain a masters degree in the same field, but perhaps only to satiate his own interest rather than for using it as a means to find employment..
Keshav has found blockchain and its concepts fascinating ever since he started going down the rabbit-hole back in 2020. On-chain analysis in particular has been something he likes to research more about, which is why his NewsBTC pieces tend to involve it in some form.
Being of the science background, Keshav likes if concepts are clear and consistent, so he generally explains the indicators he talks about in a bit of detail so that the readers can perhaps come out having understood and learnt something new.
As for hobbies, Keshav is super into football, anime, and videogames. He enjoys football not only as a watcher, but also as a player. For games, Keshav generally tends towards enjoying singleplayer adventures, with EA FC (formerly FIFA) being the only online game he is active in. Though, perhaps due to being ultra-focused on the game, he is today a semi-pro on the EA FC scene, regularly participating in tournaments and sometimes even taking back prize money.
Because of his enthusiasm for anime and games, he also self-learned Japanese along the way to consume some of the untranslated gems out there. The skill didn’t merely remain as just a hobby, either, as he put it to productive use during his exploration for small-time gigs at the start of COVID, fulfilling a couple of Japanese-to-English translation jobs.
Keshav is also big into fitness, with agility and acceleration-related workouts making a big part of his program due to the relevance they have in football. On top of that, he also has a more traditional strength based program for the gym, which he does to maintain an overall fitness level of his body.
Disclaimer: The information found on NewsBTC is for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.
