Bitcoin NVT Ratio


About NVT Ratio

NVT Ratio (Network Value to Transactions Ratio) is the ratio of the Market Cap divided by the volume transmitted by the blockchain. Simplistically it could be seen as analogus to the PE Ratio used in equity markets. When Bitcoin`s NVT is high, it indicates that its network valuation is outstripping the value being transmitted through its blockchain.

We should take care not to think of volume through the blockchain as payments. Bitcoin is a store of value network, so volume passing through the blockchain reflects investor flows. More investment activity generates increased volume, when this volume dries up, NVT moves higher above its normal zone, this signals a bear market.

As investment flows move off the base chain onto higher layers like sidechains or an ETF, I expect NVT to skew or otherwise reduce in signal. Note that Liquid, Bitcoin`s first sidechain, went live 10 Oct 2018, this has taken volume off the main chain, but its effects so far have been minimal.


Bitcoin`s NVT is calculated by dividing the Network Value (market cap) by the the daily USD volume transmitted through the blockchain. Alternatively we calculated as inverse monetary velocity, the coin supply of Bitcoin divided by the coins transmitted by the blockchain in a given day.

In the chart above, the NVT line has been filtered with a 14 day median.


NVT first made an appearance as a tweet on my Twitter account in Feb 2017. In that tweet I promised an explanatory article which came much later in Oct 2017, first debuting on Forbes.

In Feb 2018, Dimitry Kalichkin published his work to improve NVT for use as a more responsive indicator, hence Kalichkin NVT Signal. In the same month I applied some trader techniques to NVT Signal and published an article summarising how to use it within a trading environment.

Volume Estimates and Data Source

NVT requires estimates of the volume transmitted by the blockchain, so in this chart I`ve included NVT under various estimates. Coin Metrics (Data Pro product used here under license) is the default and best. Previously I used estimates, I discovered this has been drifting, I`ve included it here so we can compare it to older legacy charts of NVT. HODL Volume is an estimate I came up with which counts all coins in wallets less than 24hrs old, this means they have moved in the last 24hrs thus a proxy to 24hr volume, it should be immune from drifting, so a useful "canary in the coal mine" should we find the Coin Metrics data to drift in future.

Data sources:

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: Author : @woonomic

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