Data from Glassnode reveals a crossover in the Bitcoin NVT price model has recently taken place, something that has historically been bullish for the crypto’s price.
Bitcoin NVT Price 28-Day Curve Has Crossed Above The 90-Day
As per the latest weekly report from Glassnode, the BTC NVT price model has observed a bullish formation recently.
NVT stands for “Network Value to Transaction.” The NVT ratio is an indicator that measures the ratio between the Bitcoin market cap and the network transaction volume.
Generally, high values of the ratio suggest that the crypto is overvalued right now. While low ones may imply the coin is undervalued.
The “NVT price model” takes the two-year median of this metric and multiplies it by the current transaction volume.
“The resulting model thus establishes an implied valuation based on the current utilisation levels of Bitcoin for value settlement,” explains the report.
Related Reading | Bitcoin Bearish Signal: 600-Day MA Starts To Break Down
Now, here is a chart that shows the trend in the 28-day and 90-day period 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 graph, both the NVT price models seem to value Bitcoin at between $32.5k (90-day) and $36.1k (28-day). The two metrics also look to be bottoming out at the moment, and potentially showing a reversal.
Just recently, the faster 28-day curve has crossed over the slower 90-day version. Such a formation has historically been bullish for the coin’s price.
Related Reading | Specialists Expect Bitcoin Back To $65K By End Of Year, Survey Finds
On the other hand, whenever the 90-day NVT price model has moved over the 28-day line , a bearish flag has gone off instead.
The report notes that while the current crossover can be bullish for the price of Bitcoin, the signal does require the confirmation of time to show that positive momentum is in play.
At the time of writing, Bitcoin’s price floats around $40.5k, down 1% in the last seven days. Over the past month, the crypto has lost 9% in value.
The below chart shows the trend in the price of the coin over the last five days.
The price of BTC seems to have surged up over the past twenty-four hours | Source: BTCUSD on TradingView
After plunging below the $39k level yesterday, Bitcoin has once more rebounded back above the $40k mark today.
It’s unclear currently whether this new positive momentum will last or if it will die out just like the last few attempts. However, if the NVT price model is anything to go by, in due time the crypto may observe some real movement up again.
Featured image from Unsplash.com, charts from TradingView.com, Glassnode.com