On-chain data shows the Bitcoin Network Value to Transactions (NVT) Golden Cross is currently at a level that could suggest BTC to be underpriced.

As explained by an analyst in a CryptoQuant Quicktake post, the cryptocurrency could enter into a recovery phase based on the NVT Golden Cross reading. The “NVT ratio” is an indicator that keeps track of the ratio between the Bitcoin market cap and the network’s transaction volume (both in USD).

When the value of this metric is high, it means that the cryptocurrency’s value (that is, its market cap) is high compared to its ability to transact coins (the transaction volume). Such a trend could imply the asset is overpriced right now.

On the other hand, the indicator assuming a low value implies the market cap isn’t overinflated compared to the transaction volume, so the coin could have room to see a surge.

In the context of the current topic, the NVT ratio itself isn’t of interest, but rather a modified version called the NVT Golden Cross. This metric compares the NVT ratio’s short-term trend against its long-term trend to identify the indicator’s tops and bottoms.

The 10-day moving average (MA) represents the short-term trend, while the 30-day MA corresponds to the long-term trend. Now, here is a chart that shows the trend in the NVT Golden Cross for Bitcoin over the past few years:

In the graph, the quant has highlighted two historically important regions for the Bitcoin NVT Golden Cross. In the zone above 2.2, the asset may be considered overvalued and due a correction.

Similarly, the region below the -1.6 line is where bottoms have occurred, as the coin becomes underpriced here. The chart shows that the indicator’s value has recently declined in this latter zone.

The last time the NVT Golden Cross declined into the undervalued zone was during the market downturn that had followed the spot exchange-traded fund (ETF) approval at the start of the year. This drop was succeeded by the cryptocurrency’s rally towards a new all-time high (ATH).

Thus, it’s possible that Bitcoin could also end up enjoying a rally this time. The surge may also have already begun, as the coin has recovered beyond the $64,000 level since its plunge under $54,000.

Despite this rally, the NVT Golden Cross still has a value of -1.8, within the undervalued zone. If this indicator is anything to go by, the run could still have room to go.

At the time of writing, Bitcoin is trading at around $64,900, up 13% in the past week.

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