The post Bitcoin May Not Sustain $27K As Network Becomes Overvalued, Indicated By 5-Year High NVT Signal appeared first on Coinpedia Fintech News

The price of Bitcoin struggled to find buyers near the $28,000 mark and remained under the influence of sellers. Despite a significant correction, BTC’s price has stabilized around $27,000. However, this stability may not last long, as a key metric has reached a five-year high. The NVT signal, which hasn’t been this high since 2019, suggests that the price could soon decline to eliminate the unsustainable bubble.

Bitcoin Activity Won’t Support $27,000 BTC Price

While buyers may find peace in the relatively stable Bitcoin price around the $27,000 mark, their bullish hope could be short-lived due to a concerning metric. Glassnode’s data reveals that Bitcoin’s NVT signal (network value to transaction) has surged to 1,737.098, a level unseen in the past five years. This metric could potentially create a turmoil for BTC price near the current level.

NVT, developed by statistician Willy Woo, is a metric that assesses the relationship between on-chain activity and the price of Bitcoin. The NVT signal adjusts its measurements by employing a 90-day moving average of daily transaction volume instead of using raw data. This modification, as suggested by Glassnode, enhances the effectiveness of NVT and enables it to serve as a more reliable leading indicator.

Despite exhibiting a relatively stable price throughout the current year, in contrast to its historical volatility, Bitcoin’s NVT ratio has experienced a notable upswing since the beginning of 2023. The momentum was accelerated when the BTC price soared past the $20K mark, subsequently establishing itself above $30K recently.

Although Bitcoin’s value is currently less than half of what it was in 2022, the network volume has declined so significantly that even its present valuation of $27,000 may be unsustainable. A high Bitcoin NVT indicates that its network valuation is exceeding its transaction value, which can signal either robust growth and investor hype or an unsustainable price bubble.

What’s Next For BTC Price?

Bitcoin recently soared past the immediate resistance of $27,500, bringing a renewed hope of buying momentum. However, the effort to surge above is being prevented by sellers as BTC price struggles at EMA20. Currently, BTC price is trading at $27,440, surging over 0.31% from yesterday’s rate.

Bulls are anticipated to send the price towards $28,500 again, where they may face resistance from bears. A surge above the level will take the BTC price above $30K. However, on the bearish side, BTC price is expected to witness a rebound.

Initial support region on the downside is between $26,000-$26,500. A rebound from this level will indicate purchases by buyers near the dip, which can trigger an upward trend. To gain the upper hand, sellers must pull the price below this support range. However, the RSI level is trading above the midline at 52 and Bitcoin holds momentum above EMA200, which can weaken sellers’ demand.