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NVT ratio BCH near ATL while BTC near ATH

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Avatar for MarcDeMesel
Written by   1370
1 month ago

Chart below shows NVT ratio of BCH. A low reading as you see today of 17 means Network Value is low compared to amount of USD value sent over the network.

Since BCH forked off from BTC in 2017 this NVT ratio has been on average around 40 and trending down, with peaks above 100 and bottoms below 20, with ATH at 187 early 2018 when BCH was topping out around $2000 per coin and ATL was at 10 when BCH was bottoming around $100 end 2018:

(If above chart is unreadable, you can find NVT chart for both BTC and BCH on https://network-charts.coinmetrics.io/. On metrics select PriceUSD and NVTAdj90, and add asset BCH)

A reading below 20 as we see today only happened once more, during Corona crash in March 2020, when BCH dropped to same level of 17 we see today, and has always been a great buying opportunity.

A low reading can happen because amount of value sent goes up a lot while price stays flat, or because price drops a lot, while value sent over network stays flat. A low NVT reading for a crypto is comparable to a low Price-To-Book or Price-To-Earnings ratio for stocks. The price of the crypto or stock is low compared to the amount of value it is used for, or it creates.

If we look at same chart for BTC we see that today we have a high reading, currently at 90:

A top last reached in Dec 2017 when BTC was peaking out at 20k before correcting to 3k by end 2018 when the ratio dropped to 50. During Corona crash 50 was revisited but since then has gone up again:

Why such a difference between NVT trend in BTC vs BCH? Completely inverse, one up to All Time Highs, the other down to All Time Lows? Both their price went up, thou BCH went up a lot less than BTC, BTC being at 32k, way above it's ATH of 20k reached in last bubble of 2017, while BCH is at $450, way below it's ATH of $4k reached in 2017.

Most important difference thou is amount of USD sent over the network, for some reason this has gone up a lot for BCH past 3 months, starting around Nov 2020 when lead implementation BitcoinABC failed to push through it's devtax and was forced to fork away from BCH, thereby changing the lead implementation of BCH to BCHN. Possibly this attracted new usage of the chain thanks to the improved fundamentals.

Today amount of USD sent for example is $6B on BCH vs $24B on BTC, that's 1/4th of BTC value transmitted, while price BCH is only 1/80th. As you can see on chart above, in the early days, BTC also had way more value sent over the network vs it's price, as is the case today for BCH, but since bubble of 2017 this has rarely been the case anymore and the value of BTC is now higher than amount of value sent over the network.

If we look at amount of transactions, that the original NVT ratio used instead of usd sent, hence why this NVT is called 'adjusted' and the original is now called NVTS for which I cannot find up to date charts anymore, we see a similar pattern. Amount of transactions has also exploded on BCH, mainly thanks to the recently launched noise.cash twitter platform:

Amount of transactions per day on BCH is now 120k, while on BTC 340k, BCH has again a very impressive 1/3th of amount of BTC transactions while price is so much lower. Also here we see that in early days BTC had way more transactions than it's value but since bubble of 2017, likely due to massive inflow of capital that remained even after the bear, while relatively little extra usage as a currency, in both amount of transactions and USD sent, this ratio again flipped with price of BTC now usually above amount of transactions and even running away as of recently to new ATH's.

Of course there is no wonder why, the amount of transactions is physically impossible to increase due to blocksize limit and has been maxed out for years showing a flat line of around 300k per day since 2017.

To verify whether the transactions of BCH are real and not faked it's valuable to look at other metrics like 'Bitcoin days destroyed' (for example by blockchair), as transactions send back and forth count very little here, compared to older coins finally moving that count a lot. Here too we see BCH making highs, confirming a real uptick in activity:

Note on Value Investing

In stocks we see that value indicators like Price-to-Earnings, Price-to-Book or Price-to-Revenue ratio flashing green does not necessarily mean that you have a good investment. Many value stocks become even cheaper over time as they lack the growth, hence why growth stocks that often do not show cheap value indicators, often still outperform as they are sold at a premium because of their strong growth, but continue to rise fast in price as well.

Ideally thou you want to find a growth stock, that does show cheap valuations for at least some of these valuation indicators, such as Tesla for example did in middle 2019 when I promoted it hard and invested half my portfolio in it. Then I saw a strong growth indicator, not earnings, but revenues, continuing to grow fast, while price had been flat for 5 years around $300 and was even dipping below 200 (pre-split, after split in 5 = $50).

In crypto we cannot expect price to collapse while growth statistics such as USD sent over network, or amount of transactions to go up in meantime as crypto is too fast growing sector. But what we do see is times when price goes up faster than growth metrics, typically towards end of bubble cycle, and periods where growth metrics go up faster than price, typically at start of bubble cycle. It's been a long time that BTC showed such great entry point, but BCH is certainly showing it today.

Other value analyses from for example coinfairvalue.com also confirms BCH seriously undervalued vs other top 10 coins:

https://www.reddit.com/r/btc/comments/l3txc7/bch_is_the_most_undervalued_both_in_btc_and_usd/

So make sure, if you haven't already, to stash the right flavor of Bitcoin as there are big differences in growth numbers, and their price. Currently NVT ratio clearly shows a relative high valuation for BTC and low valuation for BCH causing risk/reward to still be very attractive, despite price doubling recently to $500 per coin. I personally believe BCH has good chance to go to 30k, already to be reached in just half a year, by middle 2021.

Good luck,

Marc De Mesel

Check out my:

https://noise.cash/u/MarcDeMesel

https://twitter.com/marcdemesel

https://youtube.com/marcdemesel

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Avatar for MarcDeMesel
Written by   1370
1 month ago
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Comments

Hopefully I can become a reliable writer like you.😇😇🙏🙏🙏

$ 0.00
2 weeks ago

The wait until this post was totally worth it

$ 0.00
1 month ago

Even tradingview charts indicates something precious...

Over the last 4 weeks, BCH/BTC had support on 0.1279 and RSI is above 30 (and re-tested) since the beginning of the year. I think it is quite likely to test 0.1583 levels in BCH/BTC (the level that may also correspond to MA20 in the short term)

Now there are some investors expect to test 28K in BTC and, even if it happens, BCH is not going to have another lower low in weekly timeframe.

While there is a growing network and increasing engagement on the blockchain, it is quite possible to see higher highs according to the multiple indicators that we track. I'm in 😎

$ 0.00
1 month ago

Your words sooth my heart everyday, everything I've been looking for. I save that post too Making me feel like a superman, when you share some crucial knowledge. Thanks for sharing and hope you share more.

$ 0.00
1 month ago

Okey, maybe this is the qurantee pattern that BCH is the next BTC. I want to read and analyze more like this.

$ 0.00
1 month ago

Great Sir ❤️

$ 0.00
1 month ago

Very cool analysis. I am surprised by your findings... mostly by how much value activity there appears to be on BCH. I'd be interested to look into a more in depth perspective across all coins. Namely ETH. I also wonder what ETH will look like over time as 2.0 emerges.

Certainly there's an amount of value transfer lost in the BTC network simply because the fees are to expensive - If fees were $0.05 there instead of $10, people would certainly be using that network far more. Which is a weird bias to consider the implications of.

$ 0.00
1 month ago

Awesome post, I'll translate it to share with the BR community, really interesting metrics.

$ 1.10
1 month ago

Super metrics, I find some parts hard to understand but I did try my best. I hope BCH will outperform BTC in the long run in all aspects and get the attention in the market that it deserves. Soar high BCH!

$ 0.00
1 month ago

I just saved the article, i like your very peculiar analysis about all monetary system not just crypto but all that involves flood of cash, great article "the ones who read to understand will have a tool to help on future market predictions" the other ones will just pass by...

$ 0.00
1 month ago

BCH is actually undervalued from others in the crypto market. How can this situation be overcome? Does the crypto market depend on demand and supply like other general markets? If so, if we hodl the BCH we have, it can help increase the BCh price? Again, as far as I know, the more people transact BCH, the more it will help increase the value of BCH. Currently, the BCH transaction has increased a lot compared to last year. Here I think noise.cash site has a big contribution. Since the launch of this site BCh transaction is much more. The volume of transactions has also exploded. Which you mentioned in your article. BCH transaction through Noise.cash tips is a real transaction. Now more than 100k + transactions are being done in BCH every day, and BTC is 300k +, so BCH transaction is 1/3 of BTC. But where the price of BTC is 30k +, the price of BCH is around $ 400- $ 500. I think BCH should be around 10k + if we evaluate the transaction. But I think there will be a proper evaluation of BCH very soon. Although I am not experienced with crypto and also crypto market. But sometimes I think about it.

$ 0.00
1 month ago

always know i'm learning when i end an article with more browser tabs open than when i started. thanks for sharing those resources!

$ 0.00
1 month ago

i expected a shock-like growth in alts by the end of 2020 (in most coins that is not btc and eth). so far we was only able to observe 2x-4x growth in value, which is of course already good, but still far beyond the growth potential we could observe. we could indeed see surprises soon.

$ 0.00
1 month ago

We will be a proud 'stakeholders' of BCH when everything will go how it should be for BCH. It will not be that long, and time will come that we will be thanking you again and other personality in the BCH community for keeping us small believer of BCH's potential to stay around while it's still charging it's huge take off.

$ 0.00
1 month ago

Unbelievable! Marc, I was looking at the same exact metric, at the same website a few hours ago. I downloaded their phone app.

One thing they also add, in the phone app, is "free float NVT", which for BCH is even lower, about 11.
(free float supply as they estimate it for BCH is lower than BTC, more details here: https://coinmetrics.io/introducing-free-float-supply/).
This is probably debatable, but interesting idea.
But the NVT discrepancy between BCH and BTC is huge any way you look at it.

Anyway, glad that you wrote about it.
I believe that sooner or later, the market will realize that BCH is very undervalued.

$ 10.37
1 month ago

Funny, I'm not such an experienced trader and don't understand much of it but 3 hours ago I wrote this:

https://noise.cash/post/lngnr94g

https://noise.cash/post/12k835jn

$ 0.00
1 month ago

Wow, that's a lot of upside for BCH TA wise.

$ 0.00
1 month ago

Soar High BCH🥳🥳🥳

$ 0.00
1 month ago

Wow, thanks for this very insightful article. We all look forward to that BCH price to go up again but now we focus on earning with noise and readcash.

$ 0.00
1 month ago

Super article

$ 0.00
1 month ago

Interesting, this is a great analytical explanation on the performance of BCH against BTC. It's a fear deal though BCH still have a way up to go but the amount transferred in USD is very encouraging. I am glad to have found this article to learn some important technical aspects of cryptocurrencies. Thanks Mac.

$ 0.00
1 month ago

Interesting read, Marc! This NVT metric is new to me and definitely marks out a bright future for Bitcoin Cash, not that anyone who has been truly paying attention couldn't already see something like this on the horizon for BCH. It's great to finally see some hard numbers backing up those instincts.

$ 0.00
1 month ago

This is good to know. Good point of view and analysis, gets one wondering if BCH will really recover because what we've had since 2018 had been very low recovery attempts, even the recent highs had been nowhere close to the ATH. We all certainly hope BCH goes all the way up cos we all got shares in there lol

BTC is also being interesting as you have analyzed too, different sources tell that BTC will indeed have massive gains for 2021, although it's too mainstream, starting February BTC will experience major growths. According to more sources there's big financial institutes putting BTC on their balance sheets. "Eager to put BTC on their balance sheets. BTC will surpass the latest +40 K ATH.

Good read. Chao

$ 0.00
1 month ago

Awesome Article @MarcDeMesel, I cannot believe I am landed this very nice platform and learned what are the important in knowing what can help you in the future. I am a newbie and still learning about Crypto especially BCH, from then I dont know what are really the value of this coin, until I read your articles and some other who keep on giving information about BCH through this platform, and very amaze what really the good potential for this that can help me a lot. I awe a lot of you, thank you very much for opening my eyes about all of this. And so much thankful for the support of this platform, without you we are nothing here🥰🥰thank you so much🥰🥰

$ 0.00
1 month ago

Thank you for helping other users here.

$ 0.00
3 weeks ago

Hello I know this is not the appropriate place for this, but maybe someone will see it and can help me, my son needs a surgery and in my country I have many limitations that is why I am here, I hope it does not bother you and someone can help me, greetings from Venezuela.

https://read.cash/@yuleinis/i-ask-for-your-support-for-my-sons-surgery-5348e764

$ 0.00
1 month ago

I never thought myself to be this far with BCH, though I don't have yet a lot of knowledge about BCH, but I'm happy this article sir Marc helps me a lot, for my cryptography priorities. Thank you.

$ 0.00
1 month ago

Great post. Thanks for presenting in a beautiful way.

$ 0.00
1 month ago

Thanks for this thought-provoking and informative read, Marc.

I really do believe BCH is highly undervalued at the moment; could easily see it do a 50x during the next bull cycle. I also think noise.cash is contributing to the surge in activity on the Bitcoin Cash Network. And that is very significant, as it proves BCH can support real-life use cases based on the economy of microtransactions. BTC can't do that for the time being.

BCH is proving it can do what BTC was meant to do, and it's only a matter of time till it gets the attention and recognition it deserves in my humble point of view. I've already chosen my preferred flavour of Bitcoin; stacking BCH like there's no tomorrow and holding it tight.

Looking forward to your next publication.

Have a good one!

$ 5.10
1 month ago

Excellent article, Marc. I'm wondering if there's a way to find out if/to which extent BCH is shorted. It's no surprise that BCH has a lot of really wealthy/powerful adversaries. Is it possible that it's heavily shorted, which has fueled the price being artificially kept low?

$ 0.00
1 month ago

Indeed we are moving forward as compared to last year. We should provide a roadmap for the users. We should stand together for our token indeed.

$ 0.00
1 month ago

So you don't invest in ETH? tl;dr why?

$ 0.00
1 month ago

A very well detailed and technical explanation that confirms 2 things: Bitcoin is overvalued, BCH is terribly undervalued. The euphoria of BTC will end with the advent of the new Altseason and BCH is preparing to be among the great drivers who will eat the dominance of Bitcoin.

Another no less important fact: Bitcoin is increasingly being purchased by centralized entities, and this means that it has lost its original value to become a mere financial instrument.

Bitcoin Cash is a utility token, much more distributed among people thanks to tools such as noise.cash and read.cash, with still unexploded potential. I am a small investor and have chosen BCH rather than BTC ;)

$ 0.00
1 month ago

Thanks for these interesting metrics

for some reason [USD value sent] has gone up a lot for BCH past 3 months, starting around Nov 2020

I don't know how usd value sent is calculated, but most likely people splitting their coins will also count as value sent. It's quite possible splitting is responsible for the increased value transferred... Does fits the time frame. I wouldn't call splitting coins economic activity.

$ 0.00
1 month ago

Good point, does align with timeline, do you sent your BCH over network when splitting? Still 6B per day of value sent is very high, splitting coins likely only part of explanation, me for example I still haven't split and I suspect majority and even if I would split and it does create transaction of complete amount, then would represent only very small part of such large number.

$ 0.00
1 month ago

Good point. All splitting action together cannot be more than 21 million times price, so 10 billion in total (over 3 months), probably much less as you correctly argue) So that's negligible compared to 6 billion per day.

Now i wonder about how "value sent" is calculated from transactions. What if i send 1 bch from a 100 bch input? Does it count 1 bch, 99 bch or 100 bch?

Also cashfusion and cashshuffle are question marks. I shuffled all my coins after fork, for example and the coins go through multiple rounds.

Just looking for alternative explanations, because that metric seems very high to me.

EDIT: so I looked at how NVTAdj90 is calculated as TxTfrValAdjUSD / market cap. TxTfrValAdjUSD is detemined as follows:

The USD value of the sum of native units transferred that day removing noise and certain artifacts.

  • Early spend: outputs spent one hour or less after being created are not counted
  • Round numbers: if one output has much more precision than the other outputs in the same transaction, it’s not counted. For example, if a transaction creates 2 outputs, one of 1.00000000 BTC and one of 0.2561278 BTC, the second one would not be counted.
  • Self churn: outputs that have the same address as any of the inputs addresses are discounted

Hmm, so this would probably count 100 BCH in my example above.

$ 0.00
1 month ago

Interesting, thx for finding out the splitting of BCHA coins likely not cause. I would agree that likely little real economic transactions are part of that 6B per day, but what interest me most is comparison to BTC where same counting rules apply.

Think only the shuffle is something btc does less due to high fees and artificially inflates bch number more, but then privatizing coins is a real economic transaction. Think most likely this increased usd sent is coming, as with btc, from the speculative transactions, back and forth between wallets and exchanges, which is a good sign.

$ 0.00
1 month ago

Think only the shuffle is something btc does less due to high fees and artificially inflates bch number more

yes, and that leads to the questoin: how much is cashfusion? https://stats.cash/#/fusion says there were 3,018,811 BCH fused since Nov 2019. That's negligible, too: just ~1.5 billion USD transferred over a period of more than 1 year (using todays price). So that's not it, either.

but then privatizing coins is a real economic transaction.

in a sense it is real economic transaction. But it's not between different parties... money doesn't change hands effectively since everyone walks away with same amount as he had before. I wouldn't count it as ecnomic activity for most purposes myself. That's a meaningless discussion at this point anyway, because the amount transferred is just a drop in a bucket compared to the rest.

And yes, I agree: we're comparing with BTC here, so to attack the metric only makes sense with something that is only in one of the coins, otherwise the values are comparable and that's all we need.

$ 0.00
1 month ago

I love to see those green lines keep soaring high 💚

$ 0.00
User's avatar Yen
1 month ago

I love the chart and metrics. I hope BCH will soar at the end of the year. Thanks for this another helpful analytics Sir Marc

$ 0.00
1 month ago

If there's one thing I do not regret deciding something in my life, it would be learning about BCH and witness how big its potential to be our future. All hail to BCH! 🚀💯

$ 0.00
1 month ago

I think it's high time I start to show my community the advantage of trading in BCH. Although don't know how to start sharing this information but I just have to. Thanks Mac for this.

$ 0.00
1 month ago

Bitcoin Cash is one of the undervalued assets at the moment. Considering that one of the largest payment systems will start using it for millions of its users, demand will surely rise in the near future.

$ 0.00
1 month ago

We need more hopium asap!

$ 0.00
1 month ago

Nice reading before I go to sleep.. Hopefully,, BCH can hit the ATH price again like last 2018..

$ 0.00
1 month ago