NVT Score

NVT Score (Network Value to Transactions) Compares a cryptocurrency's market capitalization to its on-chain transaction volume, helping assess whether the network is overvalued or undervalued and identifying periods of high speculation or underuse. Compares the market value (market cap) to the transaction volume:

• High NVT indicates the asset has high network activity

• Low NVT indicates the asset has low network activity

NVT Calculation:

NVT = Market Capitalization / Transaction Volume

Data Needed for Calculation

To calculate the NVT, the following data points are required:

1. Market Capitalization:

   • The current market value of the cryptocurrency at a specific time interval (e.g., daily).

2. Transaction Volume:

   • The total volume of transactions processed on the network over the same time period.

Market Zones

The NVT Golden Cross categorizes market conditions into three zones:

• High Network Activity Zone

  • Trigger: NVT Golden Cross ≥ 2.0

  • Indicates: Potentially overvalued conditions

  • Description: High NVT values suggest the network value is high relative to transaction volume

• Normal Network Activity Zone

  • Range: -2.0 < NVT Golden Cross < 2.0

  • Indicates: Balanced market conditions

  • Description: Network value and transaction volume are in relative equilibrium

• Low Network Activity Zone

  • Trigger: NVT Golden Cross ≤ -2.0

  • Indicates: Potentially undervalued conditions

  • Description: Low NVT values suggest the network value is low relative to transaction volume

Conclusion

The NVT is a refined on-chain metric that provides valuable insights into the cryptocurrency market’s valuation trends. NVT helps traders and investors identify key turning points in the market, aiding in decision-making around when to enter or exit positions.