- Bitcoin’s NVT Golden Cross indicator suggested the possibility of a rally.
- On the other hand, the VMC indicator indicated a decline.
In a new reportThe pseudonymous CryptoQuant analyst Onchain Edge discovered this from a technical analysis of Bitcoin [BTC] price movements suggested a potential price increase but urged caution despite the potential for short-term gains.
The good
The analyst reviewed BTC’s NVT Golden Cross indicator and found that it returned a value of -2.37. This indicator compares the 30-day moving average of the coin’s Network Value to Transactions (NVT) ratio with the 10-day moving average.
When the ten-day average falls below the thirty-day average, this usually indicates undervaluation and possibly a price increase.
Conversely, when the 30-day average falls below the 10-day average, BTC is considered overvalued, causing a possible correction.
According to Onchain, the current value of BTC’s NVT Golden Cross of -2.37 is within historically bullish territory. Onchain said:
“When this number falls below 2, it usually means good news for the price of Bitcoin. This has happened five out of six times before, and it often shows that the price of Bitcoin could rise soon.”
According to data from CryptoQuantWhen BTC’s NVT Golden Cross returns values above 2.2, it indicates a possible top. Values below -1.6, on the other hand, indicate a potential bottom, often followed by an increase in value.
Based on the analyst’s point of view, an NVT Golden Cross value of -2.37 indicates a potential increase in the price of BTC.
Source: CryptoQuant
The bad
While there could be a possibility of a rally, Onchain further noted that the price of BTC observed on a daily chart showed that the coin’s price had fallen below a major “trendline” that it had been following for some time.
This indicated a possible shift in momentum.
Furthermore, the price of the coin on a three-day chart has also broken another major trendline to the downside, confirming that the price of BTC could find support at the $34,000 and $36,000 price levels.
Read Bitcoin’s [BTC] Price forecast 2024-25
To make the possibility of a decline credible, Unchained took BTC’s VMC indicator into account. (VuManChu Cipher B indicator). This indicator is used to track market momentum and identify potential trend reversals.
According to Onchained
“There is a strong bearish divergence. This means that the strength of the trend in Bitcoin’s price is getting weaker. So it looks like the price of Bitcoin will drop a bit first, perhaps around $35,000.”
Source: CryptoQuant
When BTC’s VMC indicator forms a bearish divergence, it means that the price rally may be overextended. Traders often take this as a sign that it is time to close long positions and open short positions.