NVT Shows Undervaluation of Network: Bitcoin (BTC) On-Chain Analysis

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In Brief
  • NVT is trading in a range between 20 and 40.

  • There were roughly 250,000 BTC transactions on Jan 31.

  • NVT signal has fallen below 20 for the fourth time in the last three years.

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BeInCrypto takes a look at on-chain indicators, more specifically the NVT (Network Value to Transaction) in order to determine if the Bitcoin (BTC) network is properly valued.

NVT is an on-chain indicator that measures the ratio between market capitalization and transaction volume. It was created by Willy Woo.

A high indicator reading suggests that the network value is outpacing its transaction volume. It is considered a bearish sign, since an increase in market value has to be supported by a relatively proportional increase in transaction volume.

For a more detailed analysis of NVT, click here

Current reading

Since the beginning of 2019, NVT has generally traded in a range between 20 and 40, with a few deviations above and below this level.

The deviations started becoming more pronounced near the end of 2021. At the time, the BTC price was approaching its all-time high.

On Sept, NVT deviated below it range low before reclaiming it.

More importantly, the indicator has been falling alongside the BTC price since Dec 2021. This is considered a bullish sign, since despite the price drop, transactions are not falling at the same rate.

NVT Reading
Chart By Glassnode

While the BTC price is very close to its July lows, the number of transactions is not. It is currently at 250,663, considerably above the 195,224 lows of July 2021.

Transaction count
Chart By Glassnode

NVT signal

The NVT signal is a slightly different indicator, which uses a 90-day moving average (MA) of the transaction volume instead of the raw data.

Since the 2018 bottom, NVT has fallen below 20 only four times (black circles). Most recently, it did so on Jan 24, when a low of 16.9 was reached. The previous three drops below 20 all led to considerable upward movements.

Therefore, it is possible that a similar upward movement will follow this time around.

NVT Signal
Chart By Glassnode

For BeInCrypto’s latest Bitcoin (BTC) analysis, click here


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Valdrin discovered cryptocurrencies while he was getting his MSc in Financial Markets from the Barcelona graduate school of Economics. Shortly after graduating, he began writing for several different cryptocurrency related websites as a freelancer before eventually taking on the role of BeInCrypto's Senior Analyst.

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