Will Bitcoin Downtrend Continue? This Metric Suggests Yes

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🚨 Bitcoin Bears Unite! 🚨

Will Bitcoin Downtrend Continue? This Metric Suggests Yes

Good show, old chap! The Bitcoin Network Value to Transactions (NVT) Golden Cross is looking a bit ratty, if you ask me. This on-chain data suggests a bearish outcome for the BTC price, and I’m not sure anyone wants that, do you?

Bitcoin NVT Golden Cross Is in the Red, Old Sport

As explained by our brilliant analyst chappie in a CryptoQuant Quicktake post, the NVT Golden Cross has got a bit of a problem on its hands. It’s got a high value, and I’m not just talking about the old chap’s sense of self-importance. No, no! The NVT Ratio is an on-chain indicator that keeps track of the ratio between the Bitcoin market cap and transaction volume.

The market cap, my dear fellow, is simply the total value of the cryptocurrency’s circulating supply at the current spot price. And the transaction volume? Well, that’s a measure of the total amount of the asset that’s getting involved in transfer activities on the network. When the NVT Ratio is high, it means BTC’s value is high compared to its ability to transact coins. Not exactly the sort of thing one wants to see, if you catch my drift.

On the other hand, a low NVT Ratio suggests the cryptocurrency’s price could be due a bit of a bounce to the upside. Not that I’m saying it’s going to happen, mind you. But a chap can dream, can’t he?

Now, in the context of our current conundrum, a modified form of the NVT Ratio known as the NVT Golden Cross is the indicator of interest. It’s a metric similar to the Bollinger Bands, which compares the short-term trend of the NVT Ratio against its long-term one to determine whether a top or bottom is near. The indicator uses the 10-day moving average (MA) for the short-term trend and the 30-day MA for the long-term one. Simple, old bean, but effective.

Here’s a chart that shows the trend in the Bitcoin NVT Golden Cross over the past year:

As you can see, the Bitcoin NVT Golden Cross recently touched a high value. The indicator’s rise was so sharp that it entered into a special zone past the 2.2 mark. Not exactly the sort of place one wants to be, if you ask me.

Now, as the coin’s price has gone through a bit of a retrace in the past week, the metric has cooled off. But, oh dear chap, its value still remains relatively high. As our quant chappie notes,

Currently, the NVT indicates that the pullback is likely to continue and that the recent price rise was driven by manipulation. For the upward trend to be sustainable, transaction volumes on the network must increase.

Historically, bottoms have tended to occur when the Bitcoin NVT Golden Cross has gone under the -1.6 mark. So far, the indicator has only dropped to 1.8, meaning that it still has quite the ways to go before it enters into this region.

BTC Price

At the time of writing, Bitcoin is trading around $83,300, down almost 6% in the last seven days. Not exactly the sort of thing one wants to see, if you catch my drift.

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2025-04-01 09:42