Bitcoin (BTC) is “too cheap” — $56,000 in terms of network activity — and that only means one thing, one analyst says.

In a tweet on November 24, Philip Swift, creator of the LookIntoBitcoin analytics platform, highlighted a bullish flag on Bitcoin’s advanced NVT signal.

Bitcoin ‘Severely Oversold’
Advanced NVT uses Bitcoin’s market capitalization and network size to determine whether BTC is overbought or oversold in a particular price segment.

As Swift explains in the account introduction, it builds on the original NVT and accommodates changes in investor habits as Bitcoin matures over time.

Thus, Advanced NVT is the total market capitalization of bitcoin divided by the 90-day moving average of the network’s transaction volume. At the moment, it is “deep in oversold territory”, and when this happens, prices will soon rise.

“Bitcoin looks very cheap here in terms of network activity over long periods of time,” Swift wrote.

“Expect a strong reaction in the not too distant future.”
The accompanying chart shows that advanced NVT is now at its lowest level since early 2020, excluding this year’s coronavirus incident and 2021 mining operations in China.

Advanced Bitcoin Signal Chart NVT. Source: Philip Swift / Twitter
Old hands are still under control
According to Cointelegraph, the NVT is far from the only indicator in the chain that indicates a trend reversal in the current environment.

Related: Bitcoin Sees New Highs After Second When Analysts Say It’s Time for BTC Rally

The Relative Strength Index (RSI) readings are also pointing to a rally in the price of Bitcoin, while a number of others are refusing to turn bearish despite the weak sentiment.

In its latest weekly newsletter, A Week on the Net, published on Tuesday, another research firm, Glassnode, cited a “unique case” where short-term (STH) holders control the smallest amount of bitcoin in three years while prices remain flat. …relatively close to all-time highs.

STH wallets are wallets that have used bitcoin in the last 155 days.

Analysts write: “Decreased STH supply is typically seen in late bear markets and early bull markets, usually after long periods of buildup.”

“It is relatively unique that STH prices are so low while the price is approaching ATH.”

Source: CoinTelegraph