Bitcoin Reaches New All-Time High, But This Indicator Suggests There’s Still No Overheating.
The emergence of the Bitcoin Network Value to Transactions (NVT) Golden Cross could suggest that the asset remains in a reasonable valuation range, even as its price reaches unprecedented levels.
Bitcoin NVT Golden Cross Remains Below Overbought Threshold
An analyst recently discussed the evolving pattern of the Bitcoin NVT Golden Cross. The NVT Ratio serves as an on-chain metric that assesses the relationship between Bitcoin’s market capitalization and its transaction volume.
This ratio can be helpful in evaluating whether the cryptocurrency’s pricing is either undervalued or overvalued, based on the network’s utility reflected through its transfer volumes.
A high indicator reading signifies that the market cap is considerable in comparison to the network’s transaction capabilities, which could imply that the asset is becoming overpriced.
In this discussion, a derivative of the NVT Ratio is of interest. This particular measure, termed the NVT Golden Cross, functions similarly to the Bollinger Bands as a signaling tool to indicate whether the NVT Ratio is trending towards a peak or a trough.
The NVT Golden Cross analyzes two moving averages of the NVT Ratio: the short-term 10-day MA and the long-term 30-day MA, to understand market behavior.
A chart illustrating the recent trend of Bitcoin’s NVT Golden Cross can be seen below:
The chart above reveals a recent ascent in the Bitcoin NVT Golden Cross as the cryptocurrency achieves a new all-time high. Currently, the indicator shows a value of 1.5.
The quant has identified two significant zones on the chart. A level exceeding 2.2 (marked in red) usually indicates where peaks are likely to form for Bitcoin, while a level below -1.6 (marked in green) aligns with potential bottoms.
Despite the recent upward movement, the NVT Golden Cross has not entered the red zone, suggesting that Bitcoin may still hold value without being excessively inflated. This can imply further room for price appreciation.
BTC Price
Bitcoin achieved a new milestone earlier today, reaching a price of $109,400, which exceeded the prior all-time high of approximately $109,200.
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