According to the NVT Golden Cross indicator, which is a dominant on chain metric, Bitcoin’s price trajectory may have reached “local bottom” on that measure as well.
The market, which experienced high levels, is currently cooling down, and this CryptoQuant metric(-3.3 at the moment) now might tell us that this is an opportunity to buy, said cryptoquant analyst Burakkesmeci. Bitcoin’s Network Value to Transactions (NVT) Ratio compares its market capitalisation to its transaction volume.
Bitcoin Gains Raise Overheating Concerns
If a high NVT, then the stock is overvalued, if it is low it indicates undervaluation. With this, the NVT Golden Cross cleanses the above by finding short term buy and sell zones. The metric often bottoms when the metric dips below -1.6. Readings above 2.2 are on the other hand a sign of overbought conditions and eventually local tops.
The current low NVT Golden Cross is consistent with Fear & Greed Index’s message (message edited on 20 March 2019 at 11:59:31AM Prague time) that the market sentiment is as extreme as and that I’ve seen it before. Investors still appear optimistic, but analysts say that such an elevated sentiment can also signal corrections.
In recent days, Bitcoin has proven itself robust, trading around $91,000, up 3% on a daily basis and a 19% increase for the week, according to CoinGecko data. Bullish momentum is on show in these trends, but he also raises concerns of overheating in the long run.
Firm in optimism—but wary. The NVT Golden Cross suggests a good entry point, the broader market being in excessive greed may yet hold some risks. Careful market evaluation is always critical, as historically extremes in sentiment have often been followed by reversals.
To sum it up, Bitcoin is a nuanced condition. The NVT Golden Cross indicates that Stabilization and Upside Potential is coming, however extreme greed strongly suggests that a warning sign is present. With Bitcoin continuing to move upwards, market participants should consider opportunities against a possibility of retracement.
