Bitcoin Rebounds Strongly After Formation of ‘Golden Cross’, Indicating the End of Recent Downtrend
Bitcoin’s drop from approximately $100,000 to $90,000 was somewhat expected, as CryptoCrypto had previously highlighted significant signs of an overheated market right before the sudden crash.
The recent market shakeout was anticipated to bring about a stabilization in market conditions, paving the way for a robust recovery. However, one crucial metric, the Bitcoin NVT Golden Cross, continued to remain persistent and elevated.
Significance of Bitcoin’s NVT Golden Cross
Essentially, this indicator is a modified form of the valuation measure known as Network Value to Transaction (NVT).
Historically, it has accurately identified pivotal local peaks and troughs for Bitcoin each time it transitioned into positive or negative territory. A figure over 2.2 (indicating overbuying) could signal an impending peak, while a reading below -1.6 might point towards a potential local bottom.
Analyst DarkFost from CryptoQuant recently drew attention to the NVT Golden Cross when it turned positive a few days back, hinting at a likely peak if the levels remained elevated. Presently, the metric, although still relatively high, has not breached the risky 2.2 threshold despite Bitcoin’s 9% decline.
If historical patterns persist, the current BTC NVT Golden Cross reading of 1.73 (represented by green bars) suggests that there might still be room for an additional correction in Bitcoin’s price.
On a positive note, other overheated market signals like funding rates have reverted to normalcy following the drop to $90,000.
According to IntoTheBlock, the recent market shakeout appears to have primarily been a leverage flush, potentially having cleared out the high-leveraged positions and restored funding rates to more stable levels.
However, the weakening of Bitcoin caused concern among U.S. investors as demand turned negative for the first time since the U.S. elections, as indicated by the Coinbase Premium Index, which gauges U.S. investor interest in Bitcoin.
Looking ahead, there is speculation that the trend may undergo a shift, with many market experts believing that the market has likely bottomed out and a recovery attempt is probable post the U.S. Thanksgiving holiday.