BITCOIN NVT SIGNAL

What does this chart measure?

It divides what the whole Bitcoin network is worth by the money that crossed it in a day. Coins moving on the blockchain, the public record every transfer is written to, are counted at what they were worth as they moved. Each day's reading is the average of that division over the last 90 days, so one busy day does not throw it off. A high reading means the price has climbed faster than that traffic. A low one means the traffic has kept up, or run ahead. That is why the record opens the way it does: for its first 90 days, part of the stretch each reading averages lies before the first reading, where there is nothing to count. So it begins on 16 Aug 2010 at 0.6, its lowest point, and reaches 99.71, its highest, on 14 Nov 2010, once the 90 days behind it are all readings.

Why compare it with the last four years?

There is no level that means expensive in every year, because the reading drifts as the network grows. So each day's reading, averaged over about a week, is ranked against the same weekly average on every day of the last four years, and the page's five bands follow that ranking from its bottom to its top.

What does it miss?

Only money that moves on the blockchain itself is counted. A payment settled inside an exchange, or on a faster layer built over Bitcoin, never touches it, so as those layers grow this reading understates how much the network is used. Read it beside the other cheap-or-expensive measures, not on its own. Open the price-against-what-people-paid read.

Does a high reading mean the price falls next?

No. Wide gaps have closed both ways: sometimes the money crossing the network caught up, sometimes the price came back. A reading can also sit at either end for months. It says where the price sits against network use today, not what happens next, and it is not advice to buy or sell.