MAC_D2023-12-19

BTC NVT Ratio Overvalued, Suggests Correction Possible

Network Value to Transaction (NVT) is a measure of a coin's market capitalization divided by the total amount of coins traded, with a high value indicating that the current coin price is overvalued. This metric is based on the theory that a coin's value increases the more it is used and traded. Therefore, an excessively high market capitalization relative to the number of transactions occurring on-chain suggests that the Bitcoin market is likely being driven by retail investors rather than whales. The overheating signal of this indicator suggests a possibility of adjustment soon. However, I believe December is likely to rise even if an adjustment occurs due to expectations related to the approval of spot ETFs in January next year, and it is also likely to rise to around $48K as the BTC crosses its previous high. However, I believe there is a high possibility of adjustment when the spot ETF event in January is approved or postponed and ends. The likelihood of a January correction can be attributed to a number of factors, including a surge in short-term holder rates and profits, overheating network fees due to Ordinals, increased selling pressure due to increased whale investor exchange BTC deposits, and a slowdown in whale investor BTC holdings growth. Therefore, risk management will be necessary as we get closer to the time of approval.