Analysis Cryptos

Bitcoin’s NVT Ratio Shows Relative Cheapness in 2023

Bitcoin's NVT Ratio Shows Relative Cheapness in 2023


Bitcoin’s price has been on a rollercoaster ride in the past few years, with its value skyrocketing to nearly $65,000 in 2022 before crashing down to below $30,000. However, one on-chain indicator suggests that despite the recent price increase, Bitcoin has actually become relatively cheaper in 2023. This indicator is the Network Value to Transaction (NVT) ratio, which has declined 60% for the year to date. In this article, we’ll explore what the NVT ratio is and what it tells us about Bitcoin’s valuation.

What is the NVT Ratio?

The Network Value to Transaction (NVT) ratio is a valuation metric that measures the relationship between a cryptocurrency’s market capitalization and the value of its on-chain transactions. The ratio is calculated by dividing a cryptocurrency’s market capitalization by its daily on-chain transaction volume. The higher the NVT ratio, the more overvalued a cryptocurrency may be, and vice versa.

What Does the NVT Ratio Tell Us About Bitcoin’s Valuation?

Bitcoin’s NVT ratio has declined 60% for the year to date, despite a 68% increase in its price. This indicates that BTC has become relatively cheaper in 2023, as its market capitalization has not increased at the same pace as its transaction volume. BTC’s current NVT ratio of 36.18 is slightly below the 365-day average of 36.40. However, the current ratio trails the 30-, 60-, 90- and 180-day NVT ratios, which all range between 44 and 49.

What Could be Driving the Decline in Bitcoin’s NVT Ratio?

There are several factors that could be contributing to the decline in Bitcoin’s NVT ratio. One possible explanation is that the recent price increase has led to an increase in on-chain transaction volume. This is because as the price of Bitcoin increases, more people may be motivated to buy and sell the cryptocurrency, leading to more on-chain transactions.

Another factor could be the increased adoption of the Lightning Network, a second-layer scaling solution for Bitcoin that allows for faster and cheaper transactions. As more people adopt the Lightning Network, the on-chain transaction volume may decrease, leading to a lower NVT ratio.


Bitcoin’s NVT ratio is a valuable indicator that provides insight into the cryptocurrency’s valuation. The fact that BTC’s NVT ratio has declined 60% for the year to date, despite a 68% increase in its price, suggests that the cryptocurrency has become relatively cheaper in 2023. However, it’s important to note that the NVT ratio is just one of many indicators that investors should consider when evaluating Bitcoin’s potential as an investment. As always, it’s important to conduct thorough research and analysis before making any investment decisions.

Zachary Williams is an accomplished author and cryptocurrency analyst who specializes in providing expert analysis and insights on the digital asset market. As a regular contributor to, he is known for his in-depth coverage of the latest trends and developments in the world of cryptocurrencies. Zachary's deep understanding of blockchain technology and his ability to interpret complex data sets enable him to provide readers with accurate and actionable insights into the crypto market.