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On-chain data shows the Bitcoin NVT Golden Cross has entered into the overbought region, something that could be bearish for the price. Bitcoin NVT Golden Cross Has Been Going Up Recently As pointed out by an analyst in a CryptoQuant post, the most recent touch of this zone led to a drop in the price of the cryptocurrency. The “Network Value to Transactions” (NVT) is an indicator that measures the ratio between the market cap of Bitcoin and its transaction volume (both in USD). What this metric tells is whether the asset is overpriced or underpriced right now, based on how the value of the network (the market cap) compares with its ability to transact coins (the transaction volume). High values of the indicator suggest the cryptocurrency’s cap is inflated compared to its volume, and hence, the coin’s price may be overvalued currently. Similarly, low values can imply the asset may be undervalued at the moment. Now, a metric derived from the NVT is the “NVT Golden Cross,” which compares the 30-day moving average (MA) of the NVT with its 10-day MA. By taking the ratio of the long-term and short-term trends like this, the indicator can help point out the tops and bottoms in the NVT. Here is a chart that displays how the value of the Bitcoin NVT Golden Cross has changed over the past year: The value of the metric seems to have been climbing in recent days | Source: CryptoQuant As shown in the above graph, the quant has marked the historical regions where the Bitcoin NVT Golden Cross has signaled underbought and overbought conditions for the asset. It looks like the values of the metric above 2.2 have been a sign that the cryptocurrency is undersold, while those below the -1.6 level have implied an oversold condition. Related Reading: Bitcoin Market At Decision Point: aSOPR Retests Crucial Level From the chart, it’s visible that the indicator touched the underpriced region last month, and the price reacted by observing some bullish momentum. Since then, the metric has seen an overall uptrend. A week or so ago, when Bitcoin was floating around the $30,000 level, the NVT Golden Cross entered inside the overpriced region. Following this formation, the price faced some severe drawdown as it plunged to the low $27,000 level. The metric cooled down for a while following this selloff, but in the past couple of days, it has once again risen to touch the red zone. This would mean that the asset may be becoming overbought again. Over the past day, however, Bitcoin has actually only observed some strong upwards momentum, as the coin’s value has now recovered to levels above $29,000 again. Related Reading: Polygon Exchange Supply Spikes, More Downtrend Incoming? In the past, tops haven’t always been immediately formed whenever the NVT Golden Cross has surged to this area, so this wouldn’t exactly be unprecedented. However, considering that the surge may have only made the coin more overpriced, a local top may be hit soon for the asset, if this metric’s pattern is anything to go by. BTC Price At the time of writing, Bitcoin is trading around $29,400, up 1% in the last week. Looks like BTC has sharply surged over the last 24 hours | Source: BTCUSD on TradingView Featured image from mana5280 on Unsplash.com, charts from TradingView.com, CryptoQuant.com