Chart of the Day
The Network Value to Transaction (NVT) ratio is an on-chain indicator similar to the PE ratio in equity markets. It gives an estimation as to whether the network valuation is compatible with its usage. The NVT price is the multiple of 2-year on-chain median volume and the NVT ratio. The current NVT prices, both 28- and 90-average, are currently below market price, indicating that Bitcoin is still slightly undervalued and there is potential for further growth. Another on-chain indicator, Realized Value to Transaction (RVT) ratio, a derivative of the MVRV ratio, calculates the ratio between realized value to transaction volume. It creates a useful signal for local macro tops and bottoms, and can be used to gauge which phase the market is in. A local peak in the RVT ratio often coincides with a bull run reaching its cycle top. RVT values of the current cycle are on the uptrend, but there is still some distance to go before approaching previous tops.
Talk of the Town
Prices paid by U.S. consumers rose in July at a more moderate pace, though not enough to settle, once and for all, the inflation debate between the “transitory” camp and its opponent. The consumer price index increased 5.4% from a year ago, in line with economists’ projections, but is unlikely to have a major influence on the Fed’s high-level discussion on tapering. Meanwhile, the market is on a persistent 3-day winning streak.