NVT

Network Value to Transactions (NVT) Ratio describes the relationship between market cap and transfer volume. Per Willy Woo, its creator, NVT can be considered analogous to the PE (price to earnings) Ratio used in equity markets.

Another viewpoint for NVT is that it is the inverse of monetary velocity, comparing two of Bitcoin's primary value propositions:

• Store of Value: Market Cap

• Settlement/Payments Network: Transfer Volume

Via the NVT Ratio, users can witness the relative balance between these two components , with trends and extreme values providing insights via the following general framework:

• A high NVT Ratio (or uptrend) indicates that investors are pricing Bitcoin at a premium, as Market Cap growth outpaces utilisation of on-chain transaction volume and value settlement. High NVT Ratio values have historically coincided with market tops and periods of overvaluation.

• A low NVT Ratio (or downtrend) indicates that investors are pricing Bitcoin at a discount, as on-chain Transfer Volume and network utilisation outpaces Market Cap growth. Low NVT Ratio values have historically been periods where it is advantageous to accumulate, and often coincide with market bottoms and trending bull markets.

• A constant NVT Ratio (or sideways trend) indicates that the current growth trend of both Market Cap and Transfer Volume are in equilibrium, suggesting the current market trend is sustainable. Such states are often reached during the early to mid phases of a bullish or bearish trend where the market direction is well established.

NVT Signal

NVT Signal (NVTS) is a modified version of the original NVT Ratio and carries many similar interpretation properties. It uses a 90 day moving average of the daily transfer volume in the denominator instead of the raw daily transfer volume. The implementation of this moving average makes the ratio more responsive to real time over-extensions in price action as value (Market Cap) outpaces utility (90 day Transfer Volume).

Ratio values at either extreme tell analysts one of two things:

• A high NVT Signal (or uptrend) indicates that investors are pricing Bitcoin at a premium, as Market Cap growth outpaces on-chain Transfer Volume. High NVT Signal values have historically been periods to distribute BTC and often coincide with market tops.

• A low NVT Signal (or downtrend) indicates that investors are pricing Bitcoin at a discount, as on-chain Transfer Volume outpaces Market Cap growth. Low NVT Signal values have historically been periods to accumulate BTC and often coincide with market bottoms.

• A constant NVT Signal (or sideways trend) indicates that the current growth trend of both Market Cap and Transfer Volume are in equilibrium, suggesting the current market trend is sustainable. Such states are often reached during the early to mid phases of a bullish or bearish trend where the market direction is well established.

NVT

Network Value to Transactions (NVT) Ratio describes the relationship between market cap and transfer volume. Per Willy Woo, its creator, NVT can be considered analogous to the PE (price to earnings) Ratio used in equity markets.

Another viewpoint for NVT is that it is the inverse of monetary velocity, comparing two of Bitcoin's primary value propositions:

• Store of Value: Market Cap

• Settlement/Payments Network: Transfer Volume

Via the NVT Ratio, users can witness the relative balance between these two components , with trends and extreme values providing insights via the following general framework:

• A high NVT Ratio (or uptrend) indicates that investors are pricing Bitcoin at a premium, as Market Cap growth outpaces utilisation of on-chain transaction volume and value settlement. High NVT Ratio values have historically coincided with market tops and periods of overvaluation.

• A low NVT Ratio (or downtrend) indicates that investors are pricing Bitcoin at a discount, as on-chain Transfer Volume and network utilisation outpaces Market Cap growth. Low NVT Ratio values have historically been periods where it is advantageous to accumulate, and often coincide with market bottoms and trending bull markets.

• A constant NVT Ratio (or sideways trend) indicates that the current growth trend of both Market Cap and Transfer Volume are in equilibrium, suggesting the current market trend is sustainable. Such states are often reached during the early to mid phases of a bullish or bearish trend where the market direction is well established.

NVT Signal

NVT Signal (NVTS) is a modified version of the original NVT Ratio and carries many similar interpretation properties. It uses a 90 day moving average of the daily transfer volume in the denominator instead of the raw daily transfer volume. The implementation of this moving average makes the ratio more responsive to real time over-extensions in price action as value (Market Cap) outpaces utility (90 day Transfer Volume).

Ratio values at either extreme tell analysts one of two things:

• A high NVT Signal (or uptrend) indicates that investors are pricing Bitcoin at a premium, as Market Cap growth outpaces on-chain Transfer Volume. High NVT Signal values have historically been periods to distribute BTC and often coincide with market tops.

• A low NVT Signal (or downtrend) indicates that investors are pricing Bitcoin at a discount, as on-chain Transfer Volume outpaces Market Cap growth. Low NVT Signal values have historically been periods to accumulate BTC and often coincide with market bottoms.

• A constant NVT Signal (or sideways trend) indicates that the current growth trend of both Market Cap and Transfer Volume are in equilibrium, suggesting the current market trend is sustainable. Such states are often reached during the early to mid phases of a bullish or bearish trend where the market direction is well established.