According to the latest on-chain data, the transaction value of the Golden Cross bitcoin (NVT) network has fallen in a crucial region. What could this mean for the price of the main cryptocurrency?
What does the NVT Golden Cross drop mean for the price?
In a recent Quicktake post on the CryptoQuant platform, an analyst with the pseudonym Burakkesmeci revealed that the price of bitcoin could have reached a “local bottom.” This interesting forecast is based on the latest movement of the “NVT Golden Cross” metric.
For context, the “Network Value/Transactions” ratio is an on-chain indicator that estimates the difference between bitcoin market capitalization and transaction volume. Typically, a high NVT value indicates that the price of an asset is high compared to the network's transaction volume, suggesting that the currency is overvalued.
On the contrary, when the value of the NVT metric is low, it implies that the market value of the coin is small relative to the transaction volume. This usually indicates that the asset is undervalued and its price could still have room for an upward movement.
Now, the Golden Cross indicator is a modified iteration of the NVT index and helps mark gradual buy and sell zones in short-term trends. As explained by Burakkesmeci, when the NVT GC exceeds 2.2 (the red zone), it means that the price in a short-term trend is overheating (and the formation of a potential local maximum).
On the other hand, NVT Golden Cross falling below -1.6 suggests that the price decline is wearing off, indicating a possible bottom. Burakkesmeci noted that these local highs and lows are regions and not just precise levels.
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As shown in the chart above, the NVT Golden Cross has crossed below -1.6 and is currently around -3.3, suggesting that the bitcoin price is at a local low. According to the CryptoQuant analyst, this could represent a “gradual buying opportunity” for investors looking to enter the market.
bitcoin market in extreme greed
Investors will want to proceed with caution, especially as the bitcoin market appears to be overheating in the long term. According to another CryptoQuant analyst, the Fear & Greed index has signaled extreme greed for the leading cryptocurrency.
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Normally, when the fear and greed index moves towards an extreme, there is a chance for the market to reverse depending on the sentiment. In this case, where the market is in extreme greed, the price of bitcoin may be about to witness a correction.
At the time of writing, the btc price sits just below $91,000, reflecting a 3% increase over the past day. According to data from CoinGecko, the market leader is up an impressive 19% in the last seven days.
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