Bitcoin Entered Value Zone Again As Price Floor Metric Goes Green

Bitcoin entered value zone again as the price floor metric goes green to levels not seen since March 2020 when the COVID pandemic started so let’s read further in our latest Bitcoin news.

Bitcoin reentered a key price zone that signaled the start of an end of the bear phases. Charles Edwards who is the founder of crypto investment firm Capriole flagged the BTC network value to transaction ratiometric as it delivered a new oversold signal. Bitcoin’s price losses accelerated over the weekend with the market not being far off the retest of a seminal $30,000 mark before Monday’s Wall street open. For the on-chain analyst, there are a lot of reasons to believe the extent of losses seen is more of a market overreaction rather than a simple tase of things to come.

Supporting this thesis is NVT which calculated how oversold or overbought BTC really is. NVT was developed by statisticians Willy Woo and Dmitry Kalichkin and it uses the ratio of Bitcoin’s market cap to its daily on-chain transaction volume in order to create an idea of whether price behavior really corresponds with the on-chain activity.

Edwards tweeted the metric by adding standard deviation bands to the account for natural changes in the on-chain behavior as BTC matures. The result of the dynamic range NVT and its incarnation returned to the green zone this week. Bitcoin entered the value zone again after two years of initially seeing its signs. Once was during the post-China mining ban period and the COVID crash which provides similar NV behavior. Edwards commented:

“Valuing the Bitcoin network based on transaction value throughput suggests we have entered the value zone.”

Others called into question the veracity of the losses even with BTC/USD surpassing 50% versus November’s ATH. With two months being all that it was needed for some balances to halve, trader and analyst host Scott Melker reminded his followers that this is nothing new for BTC:

“People have short memories. In May, Bitcoin went from 60K to 30K in 10 DAYS! 10 DAYS. That was much more aggressive, on much higher volume, and was only 8 months ago.
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We’ve been here before.”

When it comes to harsh reactions from the crypto markets, the current drawdown in Melker’s opinion is unremarkable. The sentiment has been at the near bottom of its historical range for a few weeks now.