The btc network value indicator (nvt) indicator is super useful to gauge market trend (shows you quite accurately if the market is undervalued)

Hi r cryptocurrency,

I've been using onchain metrics for quite a while and one metric that has been incredibly useful is the NVT golden cross. It's a variation of the nvt ratio.

The NVT Golden Cross is an on-chain indicator that measures Bitcoin's activity to give a fundamental view of its valuation.

Back in January 2024, this indicator gave a signal at -2.77, suggesting Bitcoin was undervalued. What happened next? Bitcoin surged by 85% to hit $70k. I think that quite impressive.

Last week when BTC was $55k the nvt ratio reached extreme levels of -3.6 which marked the local bottom. Before someone says in hindsight it's easy to say. I actually shared that info when it happened in my newsletter and on twitter. Here's the post. The NVT ratio is very similar to the PE ratio for companies. I also wrote a thread about it two days ago.

Fast forward to now, the NVT Golden Cross is at -2.19. It starts to become overheated above 2. You can actually look at the NVT GC on cryptoquant. (It's free and I'm not affiliated with it.)

So, how can you use the NVT Golden Cross in your trading? It's pretty straightforward.

When the value is above 2.2, Bitcoin is likely overpriced, signaling a potential sell opportunity. when it's below -2, Bitcoin is undervalued, indicating a buying opportunity.

You can read more about the nvt golden cross in this article from last week.

Thanks for reading.