The Network Value-to-Transaction (NVT) ratio is a powerful cryptocurrency fundamental analysis indicator often used to spot overvalued and undervalued cryptocurrencies. On that note, Finbold encountered two networks with a better NVT ratio than Bitcoin (BTC), likely undervalued against the leader.
The leading cryptocurrency NVT has been on a notable uptrend since November 2022, as BTC’s demand started concentrating on off-chain transactions and derivatives trading – via futures contracts or spot Bitcoin ETFs.
We retrieved data from Santiment on July 21, showing an all-time high seven-day Network Value-to-Transaction ratio of 205.63. Essentially, Santiment calculates it by dividing Bitcoin’s market capitalization over the network’s transaction volume in the last seven days.
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Therefore, a higher NVT means the market valuation is proportionally higher than how much value the network moves. According to this metric, BTC could be overvalued as its blockchain transaction volume has stagnated while the price continues to surge.
Lower NVT: Undervalued cryptocurrencies against Bitcoin
Interestingly, other cryptocurrencies with a lower capitalization have been moving a proportionally higher value on their networks, suggesting an asymmetry. These coins could be undervalued against the market’s leader, offering an interesting opportunity for less conservative investors.
Litecoin (LTC): 2.59 NVT
First, Litecoin (LTC) shows a scenario that is directly opposite to Bitcoin, with an NVT downtrend as the network is processing a steady transaction volume despite the price drop.
As of this writing, LTC trades at $73.41, confirming $8.93 billion in a week. This results in an extremely undervalued 2.59 Network Value-to-Transaction ratio.
Nano (XNO): 6.78 Network Value-to-Transaction
Notably, the Nano (XNO) network has confirmed 132,424 transactions worth 19.78 million XNO in the last seven days. Considering a $0.97 price per coin, it results in a $19.18 million seven-day transaction volume. Data is from BlockLattice.io.
The project currently has a $130.2 million market cap, considering a fully circulating supply of 133.24 million XNO. Thus, Nano’s Network Value-to-Transaction ratio of 6.78 suggests an undervalued cryptocurrency, weighted by its use and capitalization.
Nevertheless, having a low NVT does not guarantee these cryptocurrencies will outperform Bitcoin. This is a single fundamental analysis indicator that investors can use in addition to further analyses and research.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk
