Bitcoin Advanced NVT Metric Produces Local Bottom Signal.
2025-02-12
Category: None

What is Bitcoin Advanced NVT Signal?

Bitcoin Advanced NVT (Network Value to Transactions) Signal is a metric that measures the relationship between Bitcoin's market value and its transaction volume on the blockchain. Simply put, this signal shows how "healthy" Bitcoin's transactions (amount of BTC spent) are relative to its market value.

If NVT is high: Transaction volume is low, but the price is high. This indicates that Bitcoin might be overvalued.

If NVT is low: Transaction volume is high, but the price is relatively low. This suggests that Bitcoin might be undervalued or ready for a price increase.

The Advanced NVT Signal adds moving averages to make this ratio more sensitive, helping to better understand trends. In other words, it is used to determine whether Bitcoin is in an overbought or oversold zone.

Last 1 Year Performance
When we examine the performance of the Bitcoin Advanced NVT metric over the last year, we see that it generated 4 local bottom signals in 2024. These signals occurred on the following dates:

May 2, 2024 --> 30.78 (Bitcoin at 58K)

August 5, 2024 --> 35.82 (Bitcoin at 54K)

September 6, 2024 --> 35.81 (Bitcoin at 53K)

October 10, 2024 --> 38.21 (Bitcoin at 60K)

Daily closing prices are taken into account.

Current Situation
As Bitcoin has retreated from 108K to 91K recently, the Advanced NVT metric has pulled back to 38.13. Since November 11, 2024, the Advanced NVT metric has continued its downward trend and has recently entered the local bottom zone (-0.5xSD).

A rapid rise in a single day would certainly make many people happy. However, previous data shows that Bitcoin tends to continue accumulating for a while after entering this zone.

At the moment, there is no indication that the trend has reversed, but the Advanced NVT suggests that we are in a local bottom area.

Personal Opinion
I believe that the Bitcoin price will continue to accumulate within the blue box for a while and then resume its rally.

Thank you for reading.