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Home Cryptocurrency news Bitcoin

Reliable Indicator Shows Bitcoin Rally Reached Its Top at $9,200, Brutal Correction Likely to Ensue

Tony Spilotro by Tony Spilotro
12 months ago
in Bitcoin, Cryptocurrency news
Reading Time: 3min read
bitcoin top signal spinning nvt ratio
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Bitcoin’s NVT ratio, or its network value to transactions ratio, can be used to signal tops and bottoms in the crypto asset with surprising accuracy.

Although the tool’s creator hasn’t been giving it much credence in the past, it has repeatedly signaled the top over the last two years of price action. Now, the signal is acting up once again, suggesting that Bitcoin has topped out and a deep, November 2018-style drop could be coming in the days ahead.

Bitcoin NVT Signals Top Is In, November 2018 Style Drop Could Follow

Bitcoin is a first of its kind financial asset, and therefore, unusual and unorthodox methods are used to perform fundamental analysis about the overall health of the asset and its underlying network.

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Among the ways the Bitcoin protocol’s value is measured, is by comparing the asset’s current price in correlation with the overall value being transacted across the network, creating what is referred to as the NVT ratio, or network value to transactions ratio.

Related Reading | Bitcoin NVT Ratio: Top Predicting Signal Hits Highest Peak, Is a 50% Drop Ahead? 

The higher this number, the more overvalued it suggests Bitcoin price is compared to the current value being transacted across the network.

Each time this number reaches a high, it typically signals that a top is in or near, and a deep drop isn’t far behind.

At the height of the crypto hype bubble, NVT began signaling that the crypto asset was significantly overvalued, and the bear market followed.

It wasn’t until July 2018 – a time period exhibiting price action eerily similar to the current market – that the signal suggested another top was in.

In the few months following, the indicator stayed overheated, suggesting a deeper drop was ahead. In November 2018, the unthinkable happened and support at $6,000 crumbled and Bitcoin fell to its current bear market low of $3,100.

After the crypto asset bottomed, it went on yet another parabolic rally, forming and echo bubble of its previous bull cycle.

And just like the previous bull cycle, as the rally began to peak, NVT began signaling a top was in once again, and the result has been a six-month-long downtrend.

It’s only now once again that Bitcoin is looking bullish, after an inverse head and shoulders confirmed – much as it did in July 2018 – that the NVT is signaling that a top is in or near, and a drop may follow.

bitcoin nvt top and bottom indciator

Across the crypto market, analysts have been calling attention to the many similarities between now and the July 2018 price action. After Bitcoin broke through downtrend resistance, it topped out at $8,500, before falling back to support and grinding against it until it finally broke down.

Related Reading | Bulls Beware: Last Bitcoin Downtrend Breakout Led To Bear Market Lows 

If history repeats and the NVT signal confirms, Bitcoin could see a repeat of November 2018, causing one final massive dump and shakeout before the cycle starts up all over again.

Tags: bitcoincryptoNVTwilly woo
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Tony Spilotro

Tony Spilotro

I'm Tony Spilotro. Behind the pseudonym, I'm a digital media executive and global remote work leader with a decade of content experience and excellent. Here, I explore my newfound passions pertaining to privacy, finance, economics, politics, cryptography, property rights, and other libertarian-esque views. I am a Bitcoin evangelist, maximalist, and educator whenever I can be, helping to spread its message of freedom from government control, monetary policy mismanagement, and passing the buck - literally – to future generations. My journey from a curious retail crypto investor to a serious Bitcoin advocate, trader, and technical analyst is an unusual one, but life-changing nonetheless and has become less about money and more about a long-overdue revolution. While a firm believer in the laws governing math and science, I am profoundly fascinated by the impact of astrology and astronomy including moon and solar cycles and planetary alignment and their ability to influence and potentially predict markets. It hasn't yet clicked for me as to how to put anything to use, but I consider it my current rabbit hole I can't yet dig out of. My perspective of growing up alongside the internet, the dot com era, the Great Recession, and roots in video games collecting coins and rare items caused Bitcoin to immediately make sense to me. Through all of these lenses, I seek to produce content that is educational and entertaining, and I thank you sincerely for taking the time to read what I have to say. Please follow me on Twitter and feel free to drop me a line if you would like to work together.

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