Bitcoin Indicator Signals Overvaluation Preceding Recent Price Peak and Correction

Bitcoin Network Value to Transactions (NVT) Golden Cross indicator reached overheated levels during the recent Bitcoin price peak, signaling potential overvaluation.

The NVT Golden Cross compares short and long-term trends of the ratio between Bitcoin's market cap and transaction volume to assess fair valuation.

Values above 2.2 have historically indicated Bitcoin is overheated and prone to price corrections when the short-term trend far outpaces the long-term trend.

The recent Bitcoin price rally to ~$71k coincided with the NVT Golden Cross surging to 3.17, flagging overvaluation. A sharp drawdown followed.

Similar NVT Golden Cross spikes have preceded significant Bitcoin price corrections in the past few years after signaling overvaluation.