Bitcoin NVT Golden Cross Says BTC Is Close To Being “Overbought”

Bitcoin NVT golden cross has recently had values that would suggest the crypto may be close to being overbought right now.

Bitcoin NVT Golden Cross Has A Positive Value Currently

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 that’s defined as the market cap of Bitcoin, divided by the crypto’s transaction volume in USD.

A metric based on the NVT ratio is the “NVT golden cross,” which tells us how the short-term trend of the indicator compares with the long-term right now.

When the value of this metric is highly positive, it means the short-term trend is much greater than the long-term trend currently, suggesting that the crypto could be overpriced right now.

On the other hand, low negative values of the indicator imply the price of the coin may be undervalued at the moment.

Now, here is a chart that shows the trend in 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 above graph, 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 on the crypto.

Similarly, the metric exceeding the 2.2 level has been an ideal point to short the coin. It seems like recently the metric’s value has been greater than zero, with a value of around 0.8.

While this value is less than the historical short threshold, during the last few months similarly positive values have still proved to be bearish for BTC.

The latest surge in the indicator is also the highest its value has been since the spike in the last week of May, which coincided with the crash of Bitcoin from $30k levels to around $20k.

It’s unclear right now what the consequences of the current positive values may be. If the trend of the past few months follows now as well, then the crypto may face a bearish outcome soon, or the metric may reverse and die down in time, without any real impact.

BTC Price

At the time of writing, Bitcoin’s price floats 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