What is the NVT Ratio

2025lovepeace

2025-12-26 23:56:52

The NVT Ratio, or Network Value to Transaction (NVT) Ratio, is a technical indicator used to measure the value of the Bitcoin network. It compares Bitcoin’s total market capitalization with its transaction volume over a certain period.

NVT Ratio = Total Market Cap / Transaction Volume over a specific period

Specific Analytical Uses

The NVT indicator is somewhat similar to the Price-to-Earnings ratio used in traditional stock markets and can be used to assess the value of the Bitcoin network.

A high NVT ratio (or upward trend) indicates that Bitcoin’s market cap is relatively high while transaction volume is relatively low. Bitcoin’s price is overvalued. This usually suggests the market is overheated or investor sentiment is overly optimistic. Historically, extreme high NVT values indicate the market is near the top and serve as a sell signal.

A low NVT ratio (or downward trend) indicates that Bitcoin’s market cap is relatively low while transaction volume is relatively high. Bitcoin’s price is undervalued. This typically suggests the market is in a downturn or investor sentiment is cautious. Historically, extreme low NVT values indicate the market is near the bottom and serve as a buy signal.

Overall, the NVT indicator can be used to evaluate whether the valuation of a cryptocurrency is overestimated or underestimated. It reflects the health of the market and can be used to assess macro market cycles and provide buy/sell signals.

Historically, an NVT Ratio between 30 and 50 indicates a market top; below 15 indicates a market bottom. $NKN **$OGN **$SAND

BTC-1.67%

NKN-0.17%

OGN-0.37%

SAND-1.31%

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