Definition ∞ The NVT-GC Indicator, or Network Value to Transactions Gradient Cycle Indicator, assesses the valuation of a cryptocurrency network relative to its transaction volume. This on-chain metric is derived from the Network Value to Transactions NVT ratio, smoothed and adjusted to identify market cycles and potential overbought or oversold conditions. It aims to provide signals for market tops and bottoms by observing the divergence between network valuation and real economic utility. The indicator helps analysts determine if a cryptocurrency’s price is supported by its underlying network activity.
Context ∞ The NVT-GC Indicator is frequently cited in crypto news and analytical reports as a tool for evaluating the fundamental health and valuation of digital asset networks, particularly Bitcoin. Analysts use its signals to identify periods when network valuation appears disconnected from transaction throughput, suggesting potential price corrections or rallies. While it offers a unique perspective on market dynamics, its effectiveness is debated among different analytical schools. The indicator provides a quantitative measure for assessing whether a network’s growth is sustainable or speculative.
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