Golden Cross Bitcoin Network Value-to Transactions (NVT), the indicator, reached overheated levels coinciding the recent top of the local price.
Bitcoin Golden Cross soared to 3.17 during recent peak
A CryptoQuant Quicktake by an analyst post Explained that the NVT golden cross may have been an indicator for the recent peak in cryptocurrency prices.
The “NVTThis is a metric on the blockchain that compares Bitcoin’s Market Cap to its Transaction Volume (both in USD). This ratio is used in general to decide whether or not the price of an asset is reasonable.
If the indicator is very high, then the price of the asset (the market capitalization) will be high in comparison to the utility (transaction volume). A trend like this could suggest the coin’s current value is too high.
The low value could indicate that the network’s ability to move capital is not valued appropriately, so its price might be due to a rise.
The NVT is not interesting in the current context, rather a modified version of it called the NVT Golden Cross is. This metric compares short-term trends of NVT (ten-day MA) with its longer-term trends (30-day MA).
This variant, like the NVT is used to determine the fairness or value of an asset. Values greater than 2.2 are historically a signal of overheating BTC, since the short-term tendencies outpace the long-term.
Similar, values below the -16.6 level can indicate the undervaluation of the crypto; therefore, it is likely that its price will soon form a bottom, and then find a recovery.
This chart shows the Bitcoin NVT Gold Cross trend over the last couple of years.
Source:| Source: CryptoQuant
Earlier, as shown by the graph in the image above, Bitcoin NVT Golden Cross had reached highs. As the price of the asset rose towards $71,000, this increase occurred.
In this rise, the metric touched 3.17. This suggests that the coin has become overpriced. In fact, this asset was followed by an abrupt drop. drawdownThe price dropped below the $65,000 mark.
Quantitatively, as shown in the graph, the NVT Golden Cross has hit these levels at various points in recent years. This resulted in a correction in price.
The indicator, along with the Bitcoin rate, has been cooling down since the last overheated sign, but it is not yet on the downside.
BTC price
Bitcoin’s value has risen to $67,000 in the last day.
It looks like there has been a slight increase in the asset's price over the last 24-hours | Source: BTCUSD on TradingView
Charts from TradingView.com and CryptoQuant.com. Featured Image: Kanchanara, Unsplash.com
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