QuantNomad - Bitcoin NVT/NVTS

24 באוק׳ 2019

In this script I included 2 quite interesting indicators for Bitcoin:

* NVT (Network Value to Transactions Ratio)
* NVTS (NVT Signal)

Both indicators are based on Bitcoin Network Value (Market Cap) and 24h transaction volume.
For both these values I'm using Quandl datasets from Blockchainc.com:

market_cap: QUANDL:BCHAIN/MKTCP
transac_vol: QUANDL:BCHAIN/ETRVU

Calculation for both indicators are pretty simple:

NVT = median(market_cap / transac_vol, 14 bars)
NVTS = market_cap / sma(transac_vol, 90 bars)

NVT and NVTS are cryptocurrency's answers to P/E ratio. They can help you to understand if bitcoin is under/overvalued.
When NVT or NVTS is relatively high it can be a pretty good point to short bitcoin, if it's low it good time to buy bitcoin.

NVT Ratio - was created by Willy Woo
NVT Signal - was created by Dimitry Kalichkin

Because of different sources of transaction volume data, these indicators can differ in values from originals, but magnitude should be the same.

This is a pretty simple example where you can select only static overbought/oversold levels and when indicator will be above/below it you will see in changing in color.

I have many more things in my head how these indicators can be developed further and what strategies can be derived from them, but as is they can be a pretty good base for you. Will share my advanced findings later.