Bitcoin Golden Cross NVT has recently had values that suggest the crypto could be close to being overbought right now.
Bitcoin NVT Golden Cross has a positive value currently
As noted by an analyst in a CryptoQuant post, the golden cross NVT has reached its highest value since the last week of May.
The “Network Value to Transactions” (NVT) ratio is an indicator that is defined as the market capitalization of Bitcoin, divided by the transaction volume of the crypto in USD.
A metric based on the NVT ratio is the “golden cross NVT”, which tells us how the short-term trend of the indicator compares to the long-term trend at the moment.
When the value of this metric is very positive, it means that the short-term trend is much higher than the long-term trend currently, suggesting that the crypto could be overpriced at the moment.
On the other hand, low negative values of the indicator imply that the price of the coin may be undervalued at the moment.
Now here is a chart showing the trend of the 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 chart above, the “short” and “long” zones of the Bitcoin NVT golden ratio are marked. Historically, the indicator declining below a value of -1.6 has been a signal to go long in crypto.
Likewise, the metric breaking the 2.2 level has been an ideal point to short the currency. The value of the metric seems to have been above zero recently, with a value around 0.8.
Although this value is lower than the historical short threshold, similarly positive values have still proved bearish for BTC over the past few months.
The latest rise in the indicator is also the highest it has been since the rally in the last week of May, which coincided with Bitcoin’s fall from the $30,000 levels to around $20,000.
Right now it is not clear what the consequences of the current positive values may be. If the trend of the last few months also continues now, then the crypto could face a bearish result soon, or the metric can reverse and disappear over time, without any real impact.
At the time of writing, the price of Bitcoin is hovering around $19.4 thousand, 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