Bitcoin NVT Golden Cross Says BTC Is Close to Being ‘Overbought’
Bitcoin NVT golden cross has recently had values that suggest the crypto may be close to being overbought right now.
Bitcoin NVT Golden Cross has a positive value at the moment
As pointed out by an analyst in a CryptoQuant post, the NVT golden cross has now hit its highest value since the last week of May.
The “Network Value to Transactions” (NVT) ratio is an indicator defined as the market value of Bitcoin divided by the crypto’s transaction volume in USD.
A calculation based on the NVT ratio is the “NVT golden cross”, which tells us how the short-term trend of the indicator compares to the long-term trend right now.
When the value of this metric is highly positive, it means that the short-term trend is much greater than the long-term trend at the moment, suggesting that the crypto may be overpriced right now.
On the other hand, low negative values on the indicator suggest that the price of the coin may be currently undervalued.
Now, here is a chart showing the trend of NVT golden cross over the past year:
Looks like the value of the metric has been positive in recent days | Source: CryptoQuant
As you can see in the graph above, the “short” and “long” zones of the golden ratio Bitcoin NVT are marked. Historically, the indicator falling below a value of -1.6 has been a signal to go long on crypto.
Likewise, the metric exceeding the 2.2 level has been an ideal point to short the coin. It appears that the value of the metric has recently been greater than zero, with a value of around 0.8.
Although this value is less than the historical short threshold, similar positive values over the past few months have still proved bearish for BTC.
The latest increase in the indicator is also the highest value it has been since the peak in the last week of May, which coincided with the crash of Bitcoin from $30k levels to around $20k.
It is unclear right now what the consequences of the current positive values may be. If the trend of the last few months also follows now, the crypto could have a bearish outcome soon, or the metric could turn around and die down in time, without any real impact.
BTC price
At the time of writing, Bitcoin’s price is hovering around $19.4k, up 2% in the last week. Over the past month, the crypto has lost 3% in value.
The price of BTC seems to have been moving flat during the last few days | Source: BTCUSD on TradingView
Featured image from Hans-Jurgen Mager on Unsplash.com, charts from TradingView.com, CryptoQuant.com
