Happen[In]Crypto takes a look at on-chain indicators, in particular, the NVT (Network Value for Transactions) to determine whether the Bitcoin (BTC) network is of true value.
created by willy wooNVT is an on-chain indicator that measures the ratio between the trading volume of an asset and its market capitalization.
Higher readings mean that the network value is growing at a faster rate than its transaction volume. This is considered a bearish sign, as it indicates that the growth is not organic and in turn may not be sustainable.
current reading
Since the current bull run started from December 2018, the NVT has given a reading between 15 and 66. It has traded between 30 and 50 for the vast majority (black rectangle), but since July 2021 there has been considerable divergence from the bottom and up.
Interestingly, it has been declining in April and hit a low of 8.28 on April 28 (red circle). This is the lowest level since January 2018.
Therefore, according to NVT, the current BTC price is undervalued.
NVT signal
The NVT signal is a slightly different indicator, which uses a 90-day moving average (MA) of trading volume instead of raw data.
The indicator gave readings below 20 only four times (dark circles) since December 2018. The first three made considerable upward movement, while the fourth has yet to initiate a reaction.
Currently, the NVT signal is at 17.8, and is approaching its yearly low of 16.60.
Since the trend line from those lows (black line) is still intact, it is likely that an upward movement is still in place.
NVT Price Model
Lastly, the NVT price model provides an interesting reading that supports the possibility that an upward movement will occur. The model uses a 28-day (green) and 90-day (red) median of the NVT ratio to provide a fast and slow signal.
A bullish cross occurs when the faster (green) signal crosses above the slower (red) signal. Historically, such crosses have been preceded by an upward movement (black circle).
A bullish cross occurred on April 11th (red circle), and the bullish signal has been moving upwards at an accelerated rate since then.
Ultimately, the NVT and its variations all indicate that BTC is undervalued and may soon start an upward move.
be for[I]nCrypto’s Latest Bitcoin (BTC) Analysis, Click Here,
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