Key Points
- Bitcoin’s NVT Golden Cross signal remains high despite recent price decline.
- U.S. investor demand for Bitcoin turns negative for the first time since the elections.
Bitcoin’s recent drop from around $100K to $90K did not come as a shock. Key market overheating signals had been identified before the rapid decline.
The market was expected to stabilize after this shakeout, paving the way for a robust recovery. However, a significant local top/bottom metric, the Bitcoin NVT Golden Cross, remained elevated.
Understanding the NVT Golden Cross Warning
The NVT Golden Cross is a modified version of the valuation metric Network Value to Transaction (NVT). It has accurately identified past local Bitcoin tops and bottoms when it turns positive or negative. A reading above 2.2 suggests a likely top, while a low reading of -1.6 indicates a possible local bottom.
CryptoQuant analyst DarkFost raised a flag a few days ago when it turned positive, warning of a potential top if it remained high. Despite the 9% BTC decline, the metric is still high, though below the risky 2.2 level.
If past trends persist, the current BTC NVT Golden Cross reading (1.73) suggests that BTC might be due for an additional correction.
However, other overheated market signals, like funding rates, have normalized after the drop to $90K. According to IntoTheBlock, the shakeout was a leverage flush, which might have run its course after clearing high-leveraged positions and normalizing funding rates.
U.S. Investor Demand Turns Negative
The weakening of BTC has caused stress among U.S. investors. For the first time since the U.S. elections, demand has turned negative. This is reflected in the Coinbase Premium Index, which tracks U.S. investor appetite for Bitcoin.
Despite the current situation, many market experts believe that the bottom has been reached and a recovery attempt is likely after the U.S. Thanksgiving holiday.
