Bitcoin (BTC) NVT Ratio Reset Suggests Undervaluation At Current Price, Bullish Signals Intact

Published May 4, 2021 | Updated May 4, 2021

In Brief
  • The declining NVT ratio points at bullish signs for Bitcoin in near future based on historical trends.
  • Bitcoin (BTC) Exchange Supply hits 5-month low
  • Bitcoin dormant coins and HODLing sentiment on the rise.

Bitcoin (BTC) NVT Ratio Reset Suggests Undervaluation At Current Price, Bullish Signals Intact

  • The declining NVT ratio points at bullish signs for Bitcoin in near future based on historical trends.
  • Bitcoin (BTC) Exchange Supply hits 5-month low
  • Bitcoin dormant coins and HODLing sentiment on the rise.

After attaining $59,000 levels on Monday, May 3, Bitcoin has slumped back 4.5% and is currently trading at $55,677 with a market cap of $1.042 trillion. Although Bitcoin seems under selling pressure at this point, its on-chain fundamentals clearly point that the world’s largest crypto is undervalued at this stage.

Bitcoin’s Network Value to Transaction Ratio (NVT) is going south which is a bullish signal for the Bitcoin price. Citing historical chart patterns, crypto analyst Willy Woo shows that Bitcoin has always seen a strong bounce back after trading at similar NVT levels previously.

On the other hand, the BTC supply at exchanges has been constantly dropping. Last week, CoinGape reported how institutional players took off nearly 12K from the Coinbase exchange which most likely has gone to cold storage. Over the last five months, BTC supply at exchanges has been on a constant declining trend.

Tether (USDT) Stablecoin Demand Hits All-Time High

As per the on-chain data provider, the demand for the most popular stablecoin Tether (USDT) touched an all-time high last week. The outstanding USDT supply increased by 3% or $1.48 billion last week with the total minted supply reaching over $51.78 billion.

As a result, the Stablecoin Supply Ratio (SSR) has reached an all-time low of 9.6. This declining trend in SSR value shows that the global stablecoin supply is becoming larger in comparison to the Bitcoin market cap. The Glassnode report mentions:

“As the total supply of stablecoins increase, it suggests an increased ‘buying power’ of crypto-native capital that can be quickly exchanged and traded into BTC and other crypto-assets”.

On the other hand, the report also shows that there’s a growing conviction of HODLing Bitcoins among investors rather than liquidating it anytime soon. Thus, the dormant BTC coins have been growing in numbers suggesting strong conviction to HODL. As we can see in the below image, there’s a surge in the long-term holder net position change since April 8.

Courtesy: Glassnode
Disclaimer
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
About Author
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
Bhushan Akolkar 417 Articles
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
Follow Bhushan @