🚨 Bitcoin is currently above 100K, reaching $105,800, but the most important question that haunts many investors and traders is whether Bitcoin is nearing its peak‼️‼️
So I brought you a simple and easy indicator that allows you to understand the price of Bitcoin and whether the price is fair or not?
The indicator is NVT
The NVT indicator is used to assess whether a cryptocurrency is overvalued or undervalued, in a manner similar to the price-to-earnings (P/E) ratio in stocks.
But instead of earnings, this indicator relies on the transaction volume on the network.
Formula: NVT = market cap / average transaction volume on the network over 90 days.
What does the indicator tell us right now? 🤔
The indicator has risen above the red zone (i.e., the market is overvalued).
Bitcoin price exceeds $100,000.
Historically, very high NVT levels often precede corrections or slowdowns in price performance.
Red = overvalued market
Green = undervalued market
Important Note:
The indicator does not take into account the activity of the Bitcoin Lightning Network or trading within centralized exchanges, which may affect the accuracy of the results.
Conclusion:
According to the NVT indicator alone, the market does not seem 'cheap' at the moment.
This does not necessarily mean that a crash is imminent, but it is an indicator that calls for caution and perhaps a rebalancing of the portfolio.
✅ Combining different schools of analysis with indicators helps reduce the margin of error in your analysis.
✅ The alignment of indicators with the technical outlook often gives you excellent entry and exit points.
