On-chain data shows that Bitcoin NVT’s gold cross has now entered the “sell” zone, something that could prove bearish for the price of the crypto.
Bitcoin NVT Golden Cross is rising, now has a value of 2.44
As noted by an analyst in a CryptoQuant aftercould this sell signal cause the price of BTC to drop in the next ten days.
The “Relationship between network value and transactions” (NVT ratio) is an indicator defined as the market capitalization divided by the traded volume in a specific period.
What this statistic tells us is how Bitcoin’s value currently compares to investors’ ability to trade coins, and thus whether the crypto is currently undervalued or overvalued.
An application of this ratio is through the NVT gold cross, which compares the short-term (10-day moving average) and long-term (30-day moving average) trends in NVT to indicate tops and bottoms in the price of the crypto. to give.
Historically, a metric value above 2.2 has usually been a signal to sell, while a value below -1.6 has been a bullish sign.
Here is a chart showing the trend in the Bitcoin NVT gold cross over the past year:
The value of the metric seems to have sharply gone up in recent days | Source: CryptoQuant
As you can see in the chart above, the Bitcoin NVT gold cross has recently seen a sharp uptrend.
The indicator now has a value of 2.44, which means that it has crossed the 2.20 level that historically implied sell signals.
At the end of May, the statistic saw a similar increase, rising to a peak value of 2.77. As the next month rolled around, BTC went through a massive crash from $30,000 to $20,000.
Since the crypto is once again too expensive according to the NVT gold cross, the coin may go through more intake the next few days.
However, since the value of the metric is still lower than it was at its peak prior to the June crash, there is a chance it could continue to rise before the actual sell signal arrives.
BTC price
At the moment of writing, The price of Bitcoin hovering around $16.8k, up 2% over the past seven days. Over the past month, the crypto has lost 19% in value.
Below is a chart showing the trend in the coin’s price over the past five days.
Looks like the value of the crypto has shot up during the last couple of days | Source: BTCUSD on TradingView
Featured image from Mark Basarab on Unsplash.com, charts from TradingView.com, CryptoQuant.com