CryptoQuant User Guide
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    • What is on-chain data?
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  • Background Knowledge
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    • What is UTxO?
  • Exchange Flows/Indicators
    • Glossary (Exchange Flows)
    • Exchange In/Outflow and Netflow
    • Exchange Reserve
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    • Exchange Addresses Count
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    • Fund Flow Ratio
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  • Miner Flows/Indicators
    • Glossary (Miner)
    • Miner Outflow
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    • Miner Supply Ratio
    • Miners' Position Index (MPI)
  • UTXO Data/Indicators
    • Glossary (UTxO)
    • Profit and Loss (UTxO)
    • Profit and Loss (Supply)
    • Coin Days Destroyed (CDD)
    • Binary CDD
    • Mean Coin Age (MCA)
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      • aSOPR (Adjusted SOPR)
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      • SOPR Ratio (LTH-SOPR/STH-SOPR)
    • Net Unrealized Profit/Loss (NUPL)
    • UTXO Bands (Age)
      • UTXO Age Bands
      • Realized Cap - UTXO Age Bands
      • Realized Price - UTXO Age Bands
      • UTXO Count - Age Bands
      • Spent Output Age Bands
    • UTXO Bands (Value)
      • UTXO Value Bands
      • Realized Cap - UTXO Value Bands USD
      • UTXO Count - Value Bands
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  • Market Data/Indicators
    • Glossary (Market)
    • Open Interest
    • Funding Rates
    • Estimated Leverage Ratio
    • Taker Buy Sell Volume/Ratio
    • Capitalization models
    • Realized Price
    • Exchange Whale Ratio
    • MVRV (Market Value to Realized Value) Ratio
  • Network Indicators
    • NVT Ratio
    • NVT Golden Cross
    • Puell Multiple
    • Stock to Flow Ratio
    • Stock to Flow Reversion
    • NVM Ratio
  • Stablecoin Exchange Flows/Indicators
    • Glossary (Stablecoin)
    • Stablecoin Network Data
    • Stablecoin Exchange In/Outflow & Netflow
    • Stablecoin Exchange Reserve
    • Stablecoin Exchange Addresses Count
    • Stablecoin Exchange Transactions Count
    • Stablecoins Ratio
    • Stablecoin Supply Ratio (SSR)
  • Fund data & Premium
    • Grayscale Bitcoin Trust (GBTC)
      • GBTC Digital Asset Holdings
      • GBTC Premium or Discount
  • Grayscale Ethereum Trust (ETHE)
    • ETHE Digital Asset Holdings
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  • Coinbase Premium
  • Korea Premium Index
  • Bank Supply Ratio
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On this page
  • Definition
  • What is NVT Ratio?
  • NVT Ratio: A Conceptual Overview
  • Interpreting Network Value to Transaction Ratio
  • Evolving Interpretation over Time
  • Enhancing NVT Ratio Analysis
  • Variations of NVT Ratios
  • Link to Our Data

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  1. Network Indicators

NVT Ratio

Defined as the ratio of market capitalization divided by transacted volume in the specified window.

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Last updated 1 year ago

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Definition

Network Value to Transactions Ratio (NVT Ratio) is defined as the ratio of market capitalization divided by transacted volume in the specified window.

NVT Ratio=Market CapTransaction Volume in USD\text{NVT Ratio} = \frac{\text{Market Cap}}{\text{Transaction Volume in USD}}NVT Ratio=Transaction Volume in USDMarket Cap​

What is NVT Ratio?

Network Value to Transactions Ratio (NVT Ratio) is defined as the ratio of market capitalization divided by transacted volume in the specified window.

NVT Ratio: A Conceptual Overview

NVT can be seen as analogous to the PE Ratio (Price-Earnings Ratio) but applied in the crypto world. It is a measure of how investors perceive the cryptocurrency's value in relation to its utility, specifically in terms of transaction volume. The NVT Ratio helps us answer the fundamental question: Is the network's market cap justified by its transaction activity?

Interpreting Network Value to Transaction Ratio

Understanding the interpretation of the NVT Ratio is crucial. This indicator measures whether the blockchain network is overvalued or not. Here's how to decipher this essential indicator:

High NVT Ratio

High Overvalued Network Worth = Bearish.

A high NVT Ratio suggests that the cryptocurrency network is being priced at a premium. This often coincides with periods of market exuberance, where market cap growth outpaces transaction volume. Such periods have historically been associated with market tops and potential overvaluation.

Low NVT Ratio

Low Undervalued Network Worth = Bullish.

Conversely, a low Network Value to Transactions Ratio indicates that the network is priced at a discount. This suggests that transaction volume and network utilization outpace market cap growth. Historically, this has been linked to accumulation opportunities and bullish trends.

Stable NVT Ratio

A consistent Network Value to Transactions Ratio signifies a balance between market cap growth and transaction volume. It often indicates that the market trend is sustainable and may persist.

Evolving Interpretation over Time

The interpretation of the NVT Ratio evolves as the cryptocurrency market matures and technology advances. Factors like the Lightning Network, shifting narratives, and rising coin prices can influence how we understand the Network Value to Transactions Ratio. Therefore, it's crucial to consider historical context and analyze trends rather than fixate on absolute values.

Enhancing NVT Ratio Analysis

To capture broader trends and respond to changing market dynamics, it is recommended to apply a moving average to the NVT Ratio. This offers a more comprehensive understanding of the indicator.

Variations of NVT Ratios

In addition to the standard Network Value to Transaction Ratio, there are variations that provide further insights:

NVT Signal (NVTS)

This version uses a 90-day moving average of daily transaction volume in the denominator instead of raw daily transaction volume, offering a more responsive indicator.

Velocity

Velocity measures how quickly units circulate in the network. It is calculated by dividing on-chain transaction volume by market cap, effectively being the inverse of the NVT Ratio.

Link to Our Data

If the value is too high, it means the network is overvalued compared to the low ability to transact coins in terms of volume, implying the possible removal of a coming price bubble. This interpretation is based on the effect of .​

mean reversion
NVT Ratio in CryptoQuant Live Chart
NVT Ratio in CryptoQuant Data API docs
Bitcoin: NVT Ratio, 1D – Source: CryptoQuant
Bitcoin: NVT Ratio – Source: CryptoQuant
Undervalued Representation of NVT Ratio – Source: CryptoQuant