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

Keshav Verma

Last Updated: June 11, 2024 8:09 am

3 mins read

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On-chain data shows the Bitcoin NVT Golden Cross has neared the overvalued zone recently, a sign that a drawdown could be coming.

Bitcoin NVT Golden Cross Is Near “Overpriced” Territory

An analyst in a CryptoQuant post pointed out that the BTC NVT Golden Cross has recently increased. The “Network Value to Transactions (NVT) ratio” is an indicator that measures the ratio between the market cap of Bitcoin and its transaction volume.

The “transaction volume” here naturally refers to the total amount of the asset that investors are moving around on the blockchain. The NVT ratio can be viewed as a comparison between the asset’s value (the market cap) and the blockchain’s ability to transact coins.

When the indicator is high, the market cap is higher than the cryptocurrency’s volume. Such a trend can indicate that the asset’s price is currently overvalued.

On the other hand, low values imply the market cap is low relative to the network’s ability to move tokens, so the asset’s spot price may be undervalued currently.

The indicator of interest here is not the NVT itself but a modified form called the “NVT Golden Cross.” This metric compares the long-term moving average (30-day) of the NVT with the short-term one (10-day).

Here is a chart that shows the trend in the Bitcoin NVT Golden Cross over the past year or so:

The value of the metric seems to have been going up in recent days | Source: CryptoQuant

In the above graph, the quant has marked the historical undervalued and overvalued zones for the Bitcoin NVT Golden Cross. It looks like above a value of 2.2, the asset may be considered overpriced, as the cryptocurrency’s price has generally taken a hit when the indicator has entered into this territory.

Similarly, the underpriced condition is defined at values under -1.6, with the cryptocurrency usually finding bottoms whenever the metric has dipped inside this zone.

The chart shows that the NVT Golden Cross has been rising in the last few weeks as the latest leg in the BTC rally has taken place. Earlier in the month, the metric almost touched the overpriced zone, but it declined before fully entering it, as the asset price dropped from above the $31,000 level.

Though the Bitcoin drawdown has been small, the indicator still has a relatively high value as it continues to be at a hand’s reach from the overvalued territory.

It remains to be seen whether the metric will go up again in the coming days and break into the overvalued territory (in which case, the price might observe a top formation) or if it will see further decline.

BTC Price

At the time of writing, Bitcoin is trading around $30,200, down 1% in the last week.

BTC has been quite stagnant recently | Source: BTCUSD on TradingView

Featured image from iStock.com, charts from TradingView.com, CryptoQuant.com

Keshav Verma

Keshav is currently a senior writer at NewsBTC and has been attached to the website since June 14, 2021.

Keshav has been writing for many years, first as a hobbyist and later as a freelancer. He has experience working in a variety of niches, even fiction at one point, but the cryptocurrency industry has been the longest he has been attached to.

In terms of official educational qualifications, Keshav holds a bachelor’s degree in Physics from one of the premier institutes of India, the University of Delhi (DU). He started the degree with an aim of eventually making a career in Physics, but the onset of COVID led to a shift in plans. The virus meant that the college classes had to be delivered in the online-mode and with it came free time for him to explore other passions.

Initially only seeking to make some beer money, Keshav unexpectedly landed clients offering real projects, after which there was no looking back. Writing was something he had always enjoyed and to be able to do it for a living was like a dream come true.

Keshav completed his Physics degree in 2022 and has been focusing on his writing career since, but that doesn’t mean his passion for Physics has ended. He eventually plans to re-enter university to obtain a masters degree in the same field, but perhaps only to satiate his own interest rather than for using it as a means to find employment..

Keshav has found blockchain and its concepts fascinating ever since he started going down the rabbit-hole back in 2020. On-chain analysis in particular has been something he likes to research more about, which is why his NewsBTC pieces tend to involve it in some form.

Being of the science background, Keshav likes if concepts are clear and consistent, so he generally explains the indicators he talks about in a bit of detail so that the readers can perhaps come out having understood and learnt something new.

As for hobbies, Keshav is super into football, anime, and videogames. He enjoys football not only as a watcher, but also as a player. For games, Keshav generally tends towards enjoying singleplayer adventures, with EA FC (formerly FIFA) being the only online game he is active in. Though, perhaps due to being ultra-focused on the game, he is today a semi-pro on the EA FC scene, regularly participating in tournaments and sometimes even taking back prize money.

Because of his enthusiasm for anime and games, he also self-learned Japanese along the way to consume some of the untranslated gems out there. The skill didn’t merely remain as just a hobby, either, as he put it to productive use during his exploration for small-time gigs at the start of COVID, fulfilling a couple of Japanese-to-English translation jobs.

Keshav is also big into fitness, with agility and acceleration-related workouts making a big part of his program due to the relevance they have in football. On top of that, he also has a more traditional strength based program for the gym, which he does to maintain an overall fitness level of his body.

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