Another On-Chain Metric Says BTC Is Highest In Three Years

Another on-chain metric says the BTC risk is the highest in three years as the price trading well above the $58K and it is on a bullish impulse. The prices are expected to reach hundreds of thousands per coin but a few deny this possibility. However, it might come sooner than investors think so let’s read more in our latest BTC news.

According to another on-chain metric for timing local tops and bottoms, BTC’s risk is at the highest potential for a downside in three years. The data shows that when this metric gets overheated, the reset can happen before another uptrend occurs. In some instances, the coin was able to pick the peak of the bull market despite calling the local top.

When BTC was created, it arrived with the distributed ledger technology or blockcahin. The transactions are recorded transparently and all of the activity is visible for everyone that wants to see it. the technology offers an innovative accounting system but the data that it provides can be used effectively for fundamental analysis while being used to predict future price movements as well.

The most obvious example of the on-chain activity is the hard-coded block reward halving which cuts down on the supply of BTC entering ht market. Another important metric is the total number of addresses and how many coins they contain as well as the network’s hash rate. Another tool to measure network activity that was useful in forecasting price actions was the BTC NVT or network value to transactions. According to the data by CrypotQuant, the NVT golden Cross indicator has reached a three-year high. Having a value over 2.2 shows downside risk goes up but over 4, the risk is off the charts in BTC.

What NFT does is look at the amounts of value transacted on the network compared to the total value of the network which is now the total market cap of $1 trillion. The tool was designed by Willy Woo to call out once the crypto gets overvalued compared to the value being transacted on the network. however, because of different factors, Woo abandoned the original formula and started using the Golden Cross indicator. The original NVT to is also showing selling signals but the effectiveness isn’t as strong as it used to be.