Bitcoin’s price, while volatile in recent days, is still a topic of discussion among analysts. Earlier today, a CryptoQuant analyst shed light on Bitcoin’s NVT Golden Cross, a metric known to signal potential local highs and lows in Bitcoin’s price.
According to analyst Burak Kesmeci, this indicator now presents reasons for concern as it is currently struggling to exceed its previous peaks.
How does the NVT Golden Cross signal a warning for Bitcoin?
To answer this question, it is first necessary to understand what the NVT Golden Cross means. Notably, the NVT (Network Value to Transactions) Golden Cross is a major metric used to determine the health of the Bitcoin market.
It is calculated by dividing the network value (market capitalization) by the daily trading volume and then applying a moving average to this ratio.
Traditionally, when the NVT Golden Cross rises above 2.2 points, it signals a local top, while a drop below -1.7 points indicates a local bottom.
According to the report shared by CryptoQuant analyst, the NVT Golden Cross has shown a concerning trend over the past few months.
The index has never managed to surpass its previous highs, which has always been a bearish sign. Since March 2024, the highs of the NVT Golden Cross have been in constant decline.
Kesmeci revealed that on March 31, the index plunged to 3.17, on April 29, it dropped to 3.08, on May 27: 2.67, on July 29: 2.03, and on August 26: 1.46. According to Kesmeci, this downward trend suggests that the current bullish trend in Bitcoin price may be losing steam.
The analyst noted:
It seems that to regain momentum, the NVT Golden Cross must surpass the previous peak and bring the bulls back behind it.
Outlook on the Future of Bitcoin
Despite the warning signals emitted by the NVT Golden Cross, not all analysts are sounding the alarm. Prominent cryptocurrency analyst Ash Crypto recently shared a more optimistic view of the X, suggesting that the current price declines should be viewed in the context of a broader bullish pattern.
Ash Crypto highlighted that Bitcoin’s bull flag pattern remains intact and investors should focus on long-term charts rather than short-term volatility. Ash Crypto also supported its bullish stance by highlighting global liquidity indicators.
He noted that global liquidity (M2) has reached a record high of $95 trillion, a factor that has historically correlated with significant upward movements in the price of Bitcoin.
BREAKUP
GLOBAL LIQUIDITY (M2) HAS REACHED A NEW ALL-TIME RECORD OF $95 TRILLION.
BITCOIN STILL FOLLOWS GLOBAL LIQUIDITY, SO BTC WILL SOON REACH OVER $125,000 pic.twitter.com/NGGhxD38g2
— Ash Crypto (@Ashcryptoreal) August 29, 2024
BREAKUPAccording to his analysis, this could allow Bitcoin to reach the $100,000 mark sooner than expected, with the potential for even higher gains, reaching $125,000.
Featured image created with DALL-E, chart by TradingView
