Bitcoin NVT Golden Cross Still in “Overbought” Region, Volatility to Follow?
Data shows that Bitcoin NVT Golden Cross remains in the “overbought” region, a sign that more volatility could be coming for the cryptocurrency.
Bitcoin NVT Golden Cross continues to have a high value
As pointed out by an analyst in a CryptoQuant post, long-term BTC holders have been moving their coins recently. The “NVT ratio” is an indicator that measures the ratio between the market value of Bitcoin and the transaction volume on the chain (both in USD). What this calculation tells us is whether the value of the cryptocurrency (the market cap) is comparable to the ability to trade coins or not (the volume).
When the value of the calculation is high, it means that BTC is overvalued right now as the transaction volumes are low compared to the market value. On the other hand, low values suggest that the crypto may be undervalued at the moment.
The “NVT Golden Cross” is an indicator that compares the long-term (30-day MA) and the short-term (10-day MA) trends of the NVT ratio to identify peaks and troughs in the metric. Now, here is a chart showing the trend of NVT Golden Cross over the last couple of years:
Looks like the value of the metric seems to have been high in recent days | Source: CryptoQuant
As you can see in the graph above, the quant marked the “overbought” and “oversold” regions of the Bitcoin NVT Golden Cross. When this metric has a value of more than 2.2, it means that the crypto may be overpriced right now. The coin has usually observed a bearish effect when the indicator has been in this region, as the chart shows.
The “underpriced” condition occurs in the zone where the BTC NVT Golden Cross has values less than -1.6. Also pictured is the “supply-adjusted dormancy” chart, an indicator that tells us whether or not long-term owners are currently selling.
It appears that the LTHs may have participated in a large amount of selling recently. This calculation has an influence on the NVT Golden Cross, which has also risen in recent weeks. The indicator is now in the overbought region, suggesting that Bitcoin may soon experience some bearish volatility.
BTC price
At the time of writing, Bitcoin’s price is hovering around $17k, down 2% in the last week. Over the past month, the digital asset has increased by 1% in value. The chart below shows the trend in the price of the coin over the last five days.
BTC seems to have plunged during the last day | Source: BTCUSD on TradingView
