In this article, Bitcoin Magazine will look at the Bitcoin (BTC) on-chain metric, specifically the Network Value to Transaction (NVT) ratio, to determine if the Bitcoin (BTC) network is properly valued.

What is NVT?

NVT (Network Value to Transaction) is an on-chain indicator used to determine if a network is overvalued or undervalued. It does this by dividing market capitalization by on-chain transaction volume. The indicator was created by Willy Woo.

A high value is a sign of overvaluation, as it means that an increase in market value is not supported by an increase in on-chain transaction volume. However, while high values ​​are considered bearish, lower values ​​are not necessarily considered bullish. Since the low read is probably because there is no interest in the network.

NVT . signal

NVT Signals is a slightly different indicator that uses a 90-day moving average (MA) of on-chain volume instead of raw data.

The most interesting development is that the indicator broke above the descending resistance line. The last time it did so was in early 2016, before the price of BTC increased significantly.

Furthermore, the breakout occurred after the indicator bottomed, near the 19 level. When it reached such a value in the previous times (red circle), a significant upward movement occurred.

Currently, the NVT signal is showing a value of 22.


Source: Glassnode


In the case of Ethereum, NVT has been trading below 90 (black line) for most of its history.

The only significant deviation (green circle) occurred in March 2020, prior to the start of the current bull run.

ETH has broken out above the 90 level once again. Hence, this can lead to an upward movement. However, this signal is not as clear as BTC.


Source: Glassnode

You can see the BTC price here.

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Disclaimer: This article is for informational purposes only, not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.


According to Beincrypto

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