NVT: Top and Bottom Indicator Signals Time To Buy Bitcoin

Tony "The Bull" Severino

5 years ago

3 mins read

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Bitcoin’s network to transactions ratio, or NVT for short, is an indicator developed by crypto analyst Willy Woo as a signal for deterring tops and bottoms of Bitcoin cycles.

A tweaked version of the indicator, one that was designed to filter out private transactions, is now signaling that Bitcoin is in a buy zone – an ideal time for buying Bitcoin at the point of greatest potential financial return.

Indicator That Called Bitcoin’s Recent Top Is Now Signaling Buy

Few crypto analysts have contributed to the overall Bitcoin community as much as Willy Woo. Woo has conducted extensive analysis and has even designed his own indicator for spotting the tops and bottoms of Bitcoin cycles, by looking at the network’s total value to transaction ratio.

The theory is that when Bitcoin’s total network value outpaces the ratio of transactions across the network, the price of the asset has risen past its fair market value, and is due for a correction.

The NVT indicator reached its highest peak of the last few years when Bitcoin reached its recent local top of $14,000 – a peak that was higher than even Bitcoin’s $20,000 all-time high.

However, even though the indicator work like a charm, predicting a nearly 50% fall from that top to under $8,000, Woo says that the indicator has become less reliable due to private transactions clouding the clarity of the results.

I quite like this dynamic ranging NVTS. I did something similar with NVT and quietly updated the chart last month. https://t.co/pYRuLYVNoK

— Willy Woo (@woonomic) October 10, 2019

But another crypto analyst has further honed the helpful top and bottom-calling tool, and created a version of the NVT signal that tracks the signal against a “dynamic” two-year, “long-term range.”

This new version of the indicator shows that Bitcoin’s NVT ratio has reached an ideal buy zone – typically acting as the bottom of a local cycle and providing the greatest financial opportunity in terms of eventual return on investment.

Previous Version Still Accurate, Predicted September Drop to $8,000

At the end of July, almost two full months ahead of the actual drop following the disappointing launch of Bakkt, the NVT signal had predicted that Bitcoin had topped out, and was due for a correction.

Each time the asset’s NVT signal peaked, on average the asset dropped over 50%. Bitcoin’s recent local top was $14,000, and fell just shy of reaching a full 50% retracement. However, the correction may not be over, and a full 50% or greater drop isn’t off the table just yet.

With the regular unfiltered version of the NVT signal being so accurate in calling tops, could this new, modified version of the indicator be even more accurate at calling bottoms – just as it is doing so now?

Featured image from Shutterstock

Tony "The Bull" Severino

Tony "The Bull" Severino, CMT, is a distinguished figure in the cryptocurrency analysis sector, renowned for his in-depth technical expertise and innovative approach to market trends. As the Head of Research at NewsBTC, Tony leads a team dedicated to providing cutting-edge insights and forecasts, helping both novice and experienced traders navigate the complexities of the crypto market.
A seasoned Chartered Market Technician, Tony's prowess in identifying and capitalizing on market patterns is unmatched. His academic and professional journey in market analysis has firmly established him as a leading authority in technical trading strategies. Tony’s approach is heavily influenced by the principles of Elliott Wave Theory, a method known for its rigorous assessment of investor psychology and price movements.

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Before his ascent in the financial analysis world, Tony honed his skills in journalism. His background in this field has endowed him with a unique ability to present intricate market dynamics in a clear and compelling manner, making his insights highly sought after by a broad audience that ranges from casual readers to professional traders.
His professional affiliations underscore his commitment to excellence and continuous learning. As a partner of Elliott Wave International and TradingView, Tony collaborates with other leading experts to enhance his knowledge and skills. His active membership in the CMT Association further aligns him with the highest standards of industry practices and ethics.

Tony’s nickname, "The Bull," aptly reflects his aggressive and optimistic outlook on the cryptocurrency markets. His forecasts often anticipate significant upturns, earning him a reputation for bullish predictions that have frequently led to lucrative outcomes for those who follow his advice.

In summary, Tony "The Bull" Severino, CMT, is more than just a technical analyst; he is a mentor, educator, and innovator whose influence in the cryptocurrency space continues to grow. His dedication to advancing the understanding of market forces and his commitment to providing high-quality, reliable analysis make him a pivotal figure in the world of cryptocurrency trading.