Bitcoin NVT Golden Cross Indicator Suggests Price May Reach Local Bottom
Recent on-chain data indicates that the Bitcoin Network Value to Transactions (NVT) Golden Cross has entered a significant range, raising questions about potential price implications for Bitcoin.
Impact of Falling NVT Golden Cross on Price
Analyst Burakkesmeci from CryptoQuant noted that Bitcoin may have reached a “local bottom” based on the recent NVT Golden Cross movements. The NVT ratio measures the relationship between Bitcoin's market capitalization and its transaction volume. A high NVT suggests overvaluation, while a low NVT indicates undervaluation.
The NVT Golden Cross serves as an indicator for identifying buy and sell zones in short-term trends. When the NVT GC exceeds 2.2, it signals a potential local top; conversely, a drop below -1.6 suggests a possible bottom. Currently, the NVT Golden Cross is around -3.3, indicating a local bottom and a potential buying opportunity.
Current Market Sentiment: Extreme Greed
Despite the potential buying opportunity, caution is advised as the Bitcoin market exhibits signs of overheating. The Fear & Greed Index currently reflects extreme greed, which can precede market reversals. As such, a correction in Bitcoin's price may be forthcoming.
As of now, Bitcoin's price is just under $91,000, marking a 3% increase over the past day and a notable 19% rise over the last week, according to CoinGecko data.
