Data from Glassnode reveals a crossover in the Bitcoin NVT price pattern recently, which has historically been bullish for the cryptocurrency price.
Bitcoin NVT 28-Day Price Curve Exceeded Over 90 Days
According to the latest weekly report from glassBTC NVT price pattern noticed a bullish formation recently.
NVT stands for Network Value to Transaction. The NVT نسبة ratio It is an indicator that measures the ratio between the market capitalization of Bitcoin and the volume of network transactions.
In general, high values of the ratio indicate an overvaluation of the cryptocurrency at the moment. While the low may indicate that the currency is Undervalued.
The NVT Price Model takes the two-year average of this metric and multiplies it by the current transaction volume.
The report states that “the resulting model generates an implicit valuation based on the current use levels of Bitcoin to settle for value.”
Related reading | Bitcoin Bearish Signal: The 600-Day EMA Begins to Break
Now, here is a graph showing the trend in the 28-day and 90-day versions of the NVT price model:
Looks like positive transaction momentum is building up in the crypto | Source: Glassnode's The Week Onchain - Week 17, 2022
As you can see in the above chart, both NVT price models seem to value Bitcoin between $32.5K (90 days) and $36.1K (28 days). The two metrics also appear to have bottomed out at the moment, and are likely to show a reversal.
Only recently has the faster 28-day curve surpassed the slower 90-day version. Such a formation has historically been bullish for the currency price.
On the other hand, whenever the 90-day NVT price pattern moves above the 28-day line, a bearish flag is fired instead.
The report notes that while the current crossover could be bullish for the bitcoin price, the signal requires time confirmation to show that positive momentum is in the works.
At the time of writing this report, Bitcoin price It is floating around $40.5K, down 1% in the past seven days. Over the past month, the cryptocurrency has lost 9% of its value.
The chart below shows the currency price trend over the past five days.
The price of BTC seems to have surged up over the past twenty-four hours | Source: BTCUSD on TradingView
After dropping below the $39,000 mark yesterday, Bitcoin has rebounded back above the $40k mark today.
It is currently unclear if this new positive momentum will continue or if it will just end like the last few attempts. However, if the NVT price pattern is anything to go by, the crypto in time may notice some real movement up again.
Featured image from Unsplash.com, charts from TradingView.com, Glassnode.com