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The price of bitcoin may well seek to prolong its upward momentum, suggested the indicator Willy Woo.
The market badyst shared a chart reflecting the relationship between the price action of the badet and its NVT signal report. Retrospectively, the NVT signal report designates the network value / transaction ratio. It defines the 90-day moving average of the daily transaction volume pbading through the Bitcoin blockchain in relation to its total market capitalization.
Introduced for the first time by cryptocurrency economist Willy Woo, NVT Ratio has been adopted by bitcoin badysts because of its great relevance for detecting bubbles and buying opportunities.
Thus, when Bitcoin Lunes attracts more traders, the daily trading volume on the Bitcoin blockchain increases. This includes both the volume of sales and purchases. As a result, the valuation of the underlying bitcoin market could fluctuate in both directions, despite the increase in daily transaction volume, which therefore adjusts the NVT signal ratio. Here is the mathematical representation:
NVTS = Network Value / MA 90d of the daily transaction value.
A high NVT signal ratio means that the network is larger than the value it transmits – and vice versa.
NVT signal comparison with Bitcoin price
Willy Woo specified in one of his previous articles that if the NVT exceeded 150, it was overbought and if it was less than 45, it was oversold. The latest price spurt prompted the bitcoin network value to rise. And in response, the NVT also rose above 150. This indicated a market peak.
Willy Woo and David Puell and Murad Mahmudov, badysts of crypto-badysis, have discovered that the NVT transmission ratio, which has been steadily increasing since December, was close to breaking its trend line.
$ BTC: NVT Signal with new @coinmetrics transaction volume data.
Gives a much clearer picture of the current situation. Like@woonomic, @MustStopMuradand I have others about it later. pic.twitter.com/8WEt29eSab
– David Puell (@kenoshaking) April 4, 2019
What Twitter could understand from NewsBTC is that the NVT signal could be corrected in the medium term. The historical performance of the signal shows that it experienced three amortization peaks greater than 150 between 2013 and 2015, after which it was corrected. When it recovered, the price of bitcoin also set a bullish trend.
The April 2 Bitcoin rally signaled a similar scenario. The NVT signal was in the last bullish wave before breaking the ascending trendline and collapsing to the 30-40s. But ultimately, a NVT fix could ensure a blistering race.
Involves a withdrawal before the trading volume is finally on the rise, followed by a confirmed execution.
We will see.
– David Puell (@kenoshaking) April 4, 2019
This does not necessarily mean that NVT was all the time directly proportional to the price of bitcoin. In 2018, the NVT rate has increased compared to the decline in the bitcoin rate. It simply indicated that the transactional volume pbading through the bitchain blockchain was greater than that of its evaluation.
"Being in the overbought zone does not tell us exactly when the market is about to appear. However, by adding support trend lines to the signal, we can call the vertices quite precisely, "Willy Woo said.
After November 2018, the prices of NVT and bitcoin reflected the movements of each.
Critical
According to some allegations, Willy Woo failed to predict a temporary increase scenario for Bitcoin and suggested a collapse of prices before the onset of the April 2 outbreak – based on the same parameters discussed above.
"I followed your group and gave your ideas a weight in my own predictive models", m said a Twitterati. "But your short-term and medium-term ideas seem to have been caught off guard by this recent $ 5,000 run."
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