Bitcoin: Watch out for these as BTC sends mixed signals

• Bitcoin’s NVT Golden Cross indicator suggested the possibility of a rally.
• On the other hand, its VMC indicator hinted at a decline.

In a new report, pseudonymous CryptoQuant analyst Onchain Edge found that a technical analysis of Bitcoin’s [BTC] price movements suggested a potential price increase, but urged caution despite the potential for short-term gains.

The Good

The analyst assessed BTC’s NVT Golden Cross indicator and found that it returned a value of -2.37. This indicator compares the 30-day moving average of the coin’s network value to transactions (NVT) ratio with its 10-day moving average.

When the 10-day average dips below the 30-day average, it generally indicates under-valuation and, potentially, a price surge.

Conversely, when the 30-day average falls below the 10-day average, BTC is deemed to be overvalued, causing a potential correction. 

According to Onchain, the current reading of BTC’s NVT Golden Cross of -2.37 lies within historically bullish territories. Onchain said,

“When this number goes below 2, it usually means good news for Bitcoin’s price. This has happened 5 out of 6 times before, and it often shows that Bitcoin’s price might jump up soon.” 

According to data from CryptoQuant, when BTC’s NVT Golden Cross returns values above 2.2, it signals a possible top. In contrast, values under -1.6 suggest a potential bottom, often followed by a rise in value. 

Based on the analyst’s position, an NVT Golden Cross value of -2.37 suggests a potential rise in BTC’s price.

Source: CryptoQuant

The Bad

While there might be a possibility of a rally, Onchain noted further that BTC’s price observed on a daily chart revealed that the coin’s price has dipped below a key “trendline” it had been following for some time.

This signaled a potential shift in momentum. 

Further, on a three-day chart, the coin’s price has also broken another key trendline to the downside, confirming that BTC’s price might find support at the $34,000 and $36,000 price levels. 

Read Bitcoin’s [BTC] Price Prediction 2024-25

Lending credence to the possibility of a decline, Unchained considered BTC’s VMC indicator. (VuManChu Cipher B indicator). This indicator is used to track market momentum and identify potential trend reversals. 

According to Onchained,

“A strong bearish divergence is showing up. This means the strength of the trend in Bitcoin’s price is getting weaker. So, it looks like Bitcoin’s price might go down a bit first, maybe around the $35,000 area.”

Source: CryptoQuant

When BTC’s VMC indicator forms a bearish divergence, it means that the price rally may be overextended. Traders often take this to mean it is time to close out long and open short positions.