Bitcoin Bearish Signal: NVT Golden Cross Enters Sell Zone

On-chain data shows the Bitcoin NVT golden cross has now entered into the “sell” zone, something that could be bearish for the price of the crypto. Bitcoin NVT Golden Cross Surges, Now Has A Value Of 2.44 As pointed out by an analyst in a CryptoQuant post, this sell signal might lead to BTC’s price dropping in the next ten days. The “Network Value to Transactions ratio” (NVT ratio) is an indicator that’s defined as the market cap divided by the transacted volume in a specific period. What this metric tells us is how the value of Bitcoin currently compares with the investors’ ability to transact coins, and thus if the crypto is undervalued or overvalued right now. One application of this ratio is through the NVT golden cross, which compares the short-term (10-day moving average) and the long-term (30-day moving average) trends in NVT to indicate tops and bottoms in the crypto’s price. Related Reading: Which Cryptocurrencies To Buy in 2023: Chainlink (LINK), Aave (AAVE), and Orbeon Protocol (ORBN) Historically, the metric’s value being higher than 2.2 has usually been a signal to sell, while it being less than -1.6 has been a bullish sign. Now, here is a chart that shows the trend in the Bitcoin NVT golden cross over the last year: The value of the metric seems to have sharply gone up in recent days | Source: CryptoQuant As you can see in the above graph, the Bitcoin NVT golden cross has observed some sharp uptrend recently. The indicator now has a value of 2.44, meaning it has exceeded the 2.20 level that has historically implied sell signals. Related Reading: As Stepn (GMT) Decline Continues, BudBlockz (BLUNT) Offers A Better Alternative For Crypto Investors During late May, the metric saw a similar surge and rose to a peak value of 2.77. When the following month rolled around, BTC went through a huge crash from $30k to $20k. Since the crypto is once again overpriced according to the NVT golden cross, it’s possible the coin may go through more drawdown in the coming days. However, as the metric’s value is still lower than what it was at the high preceding the June crash, there might be potential for it to rise further, before the actual sell signal is in. BTC Price At the time of writing, Bitcoin’s price floats around $16.8k, up 2% in the last seven days. Over the past month, the crypto has lost 19% in value. Below is a chart that shows the trend in the price of the coin over the last five days. Looks like the value of the crypto has shot up during the last couple of days | Source: BTCUSD on TradingView Featured image from Mark Basarab on Unsplash.com, charts from TradingView.com, CryptoQuant.com

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Bitcoin NVT Golden Cross Says BTC Is Overpriced, Decline Soon?

On-chain data shows the Bitcoin NVT Golden Cross has neared the overvalued zone recently, a sign that a drawdown could be coming. Related Reading: XRP FUD Spikes, Will This Trigger A Price Reversal? Bitcoin NVT Golden Cross Is Near “Overpriced” Territory An analyst in a CryptoQuant post pointed out that the BTC NVT Golden Cross [...]

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Bitcoin NVT Shows Bearish Crossover, Price Drop Incoming?

On-chain data shows the Bitcoin Network Value To Transactions (NVT) ratio has formed a bearish crossover, a sign that a decline may be imminent. Bitcoin NVT Ratio Has Formed A Historical Bearish Crossover The “NVT ratio” is an indicator that measures the ratio between the Bitcoin market cap and transaction volume. In simple terms, what this metric tells us is whether the asset’s price (the market cap) is fairly valued compared to the network’s ability to transact coins (the transaction volume). When the ratio has a value above 1, it means that the price may be overinflated right now, as the blockchain isn’t observing the shift of any significant amount of capital. The risk of a correction taking place generally goes up the higher the metric trends above this mark. On the other hand, the indicator being below the threshold can imply that the market cap may be undervalued currently, and thus, a price surge may be due for the asset. In the context of the current discussion, the NVT ratio itself isn’t of interest, but rather a modified form called the “NVT golden cross” is. This metric compares the short-term moving average (MA) of the NVT ratio (10-day) to its long-term MA (30-day). As pointed out by an analyst in a CryptoQuant post, this NVT golden cross may be forming a pattern currently that could lead to a correction in the asset’s price. The below chart shows the trend in the Bitcoin NVT golden cross and the 30-day exponential moving average (EMA) of the same over the past year: The two metrics seem to have crossed each other in recent days | Source: CryptoQuant As displayed in the above graph, the Bitcoin NVT golden cross has been going down recently and has just crossed under its 30-day EMA. This line appears to have historically been significant for the asset, as the instances marked by the analyst shows. Related Reading: Crypto Storm Brewing: Bitcoin Vortex Indicator Flashes Buy Alert Generally, whenever the indicator has crossed below this EMA line, the cryptocurrency’s value has taken a hit. From the chart, it’s visible that this pattern has already held up a few times during this rally so far. Naturally, if this historical precedence is anything to go by, then the current bearish crossover might also lead to Bitcoin registering a drawdown in the near future. It should be noted, though, that the crossover may not be fully confirmed yet, as the NVT golden cross has only slightly gone below the 30-day EMA so far. So it’s possible that the indicator could turn itself around in the coming days and cancel out the cross. Related Reading: Will Binance’s Zero-Fee Trading Help Bitcoin And Ethereum Prices It now remains to be seen, whether the Bitcoin NVT golden cross and the 30-day EMA would keep going in the same trajectories and solidify the cross, or if the pattern would retrace. BTC Price At the time of writing, Bitcoin is trading around $29,200, down 1% in the last week. BTC has continued to show stagnation recently | Source: BTCUSD on TradingView Featured image from mana5280 on Unsplash.com, charts from TradingView.com, CryptoQuant.com

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