According to the latest on-chain data, the Gold Cross Bitcoin Network Value to Transactions (NVT) has entered a key region. What could this mean for the price of the most critical cryptocurrency?
What does the falling NVT Gold Cross mean for the price?
In a recent Quicktake post on the CryptoQuant platform, an analyst nicknamed Burakkesmeci revealed that the Bitcoin price may have reached a “local bottom”. This invigorating forecast is based on the latest movement in the NVT Gold Cross metric.
For context, the “Network Value to Transactions” ratio is a chained metric that estimates the difference between Bitcoin’s market capitalization and transaction volume. Typically, a high NVT value signals that the asset’s price is high relative to the transaction volume on the network, suggesting that the coin is overvalued.
Conversely, when the value of the NVT metric is low, it means that the market value of the coin is miniature relative to the transaction volume. This usually means that the asset is undervalued and its price may still have room to rise.
Currently, the Gold Cross indicator is a modified iteration of the NVT indicator and helps determine gradual buying and selling zones in short-term trends. According to Burakkesmeci, he explained that when NVT GC exceeds 2.2 (red zone), it means that the price in the short-term trend is overheating (and a potential local top is forming).
On the other hand, a decline in the Gold Cross NVT below -1.6 suggests that the price decline is petering out, signaling a potential bottom. Burakkesmeci noted that these local peaks and troughs are regions rather than just exact levels.
As shown in the chart above, the NVT Gold Cross has broken below -1.6 and is currently around -3.3, suggesting that Bitcoin price is at a local low. According to the CryptoQuant analyst, this could represent a “gradual buying opportunity” for investors looking to enter the market.
Bitcoin market in extreme greed
Investors will want to tread carefully, especially since the Bitcoin market appears to be overheating in the long term. According to another CryptoQuant analyst, the fear and greed index indicates extreme greed towards the leading cryptocurrency.
Typically, when the Fear and Greed Index moves towards one end, there is the potential for a market reversal, depending on sentiment. In this case, when the market is extremely greedy, the price of Bitcoin may soon experience a correction.
At the time of writing, BTC is trading at just under $91,000, reflecting a 3% gain over the last day. According to CoinGecko data, the market leader has increased by an impressive 19% in the last seven days.
