After Bitcoin fell below $ 34,000 on July 7, Bitcoin positioned itself again near the above price range. While potentially stronger bullish sentiments would be confirmed after closing a price position above $ 36,000, Bitcoin fundamentals in the chain looked extremely positive for the past week. Network value has definitely increased BTC’s intrinsic interest in 2021, and at the time of going to press, a sharp signal was observed from one of its major indicators.
Bitcoin NVT Ratio and Signal: Market Cycle Triggers?
When talking about Bitcoin’s Network Value to Transactions, or NVT Ratio, it’s calculated by dividing Bitcoin’s market capitalization by its on-chain volume measured in USD. It describes the network usage of BTC and has been extremely reactive over time when Bitcoin was under immense buying / selling pressure.
At the time of going to press, the graph above shows an upward trend in the NVT quota since the beginning of June 2021. After hitting an annual low of 24, it is currently recording a high of 41.01, suggesting that the network value is outperforming the transmitted network.
Remember that the NVT signal is a strong reversal indicator.
The NVT signal is an aggregated representation of the NVT ratio using a 90 moving average of daily transaction volume. The present NVT signal shows an interesting position.
According to the graph above, the NVT signal has reached a low area, last observed in January 2019, and it is currently enabling an upward curve. Based on the historical charts, lower NVT signals helped Bitcoin see strong rallies in the market, and a similar situation could recur for the largest digital asset.
Let’s not put all the chips in just yet
While the on-chain metrics can get relatively bullish, the retail presence for Bitcoin is still essential to maintain the bullish momentum on the charts. According to CryptoCompares current report,
“The top spot exchanges saw a sharp drop in spot volumes last month as Binance saw a 56% drop, Huobi Global a 40.2% drop, and OKEx spot trading plummeted 41.6% . “
Such a significant drop in spot trading suggests retailers have remained extremely cautious since the drop in May and haven’t turned a positive side with the digital asset.
As such, it is still important to keep an eye on retail activity to absorb the upswing when it predominates in the marketplace.