Data shows that the bitcoin NVT Golden Cross indicator has recently fallen within the undervalued zone, a sign that could be bullish for the price.
bitcoin NVT Golden Cross Has Entered Bullish Territory
An analyst at CryptoQuant Quicktake mail He explained that the NVT Golden Cross has recently indicated bullish potential. “Network Value to Transactions” (NVT) is an indicator that tracks the relationship between bitcoin market capitalization and transaction volume.
This metric is often used to determine if the current price is fair. When the NVT has a high value, it means that the value of the cryptocurrency (the market capitalization) is high compared to its ability to transact coins (the transaction volume). Therefore, the spot price of the currency can be considered overvalued in such conditions.
On the other hand, the fact that the ratio has a low value implies that the asset may be undervalued at the moment, since the market capitalization is not too high compared to the transfer volume.
In the context of the current discussion, the NVT itself is not of interest, but rather a modified form called the “NVT Golden Cross.” This metric compares NVT's short-term trend (10-day moving average) with its long-term trend (30-day MA).
Now, here is a graph showing the trend of the NVT Golden Cross in recent years:
Looks like the value of the metric has taken a plunge in recent days | Source: CryptoQuant
Historically, the bitcoin NVT Golden Cross has had two main zones relevant to the price of the cryptocurrency, as highlighted on the chart. An indicator value above 2.2 suggests that the asset is overvalued and may be prone to forming at least a local high.
Similarly, being below the -1.6 level may indicate that the currency may be undervalued and therefore more likely to show some change. The biggest lows in 2023 occurred near the time the metric fell within this territory.
The chart shows that the value of the indicator has recently plummeted and has plunged within this latter zone. At the peak of this negative spike, the NVT Golden Cross had touched -2.5, meaning it had notably fallen below the -1.6 threshold.
As can be seen in the chart, this latest negative peak of the NVT Golden Cross exceeds what was observed during August, but is still below the levels observed at the end of June.
If we go by the historical pattern, the latest low values of NVT Golden Cross could indicate that a bottom for the cryptocurrency is near, if not already behind it.
btc Price
bitcoin has been stuck in a sideways movement for the past few days as the coin has been unable to choose any direction. Currently, the asset floats around the $42,600 level.
<img loading="lazy" decoding="async" class="alignnone size-medium aligncenter" src="https://www.tradingview.com/x/YQN6l0AH/" alt="bitcoin price chart” width=”1534″ height=”868″/>
The price of the coin seems to have gone stale during the last few days | Source: BTCUSD on TradingView
Featured image from Shutterstock.com, Charts from TradingView.com, CryptoQuant.com
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