NVT Ratio
What it shows
NVT (Network Value to Transactions) compares the network's market value with the transaction value it actually processes: this is a blockchain equivalent of the price/earnings ratio.
How to read it
Compare NVT to its own history, not to other coins. Extremely high NVT has historically warned of overvaluation, while low levels pointed to a foundation backed by network usage.
Parameters
- NVT ratio
- Low NVT = valuation backed by real network use; high = valuation running ahead of activity.
- Positive reading: Low versus its history: historically the network undervalued against real usage.
- Negative reading: High versus its history: historically a valuation detached from real activity (overheating).
- Neutral reading: Around its historical average: valuation adequate to usage.
Example
NVT falls to ~20 (Undervalued zone). The network generates high transactional activity relative to valuation, which is historically an undervaluation zone. NVT above 150 (Overvalued) is historically a valuation detached from network usage; 20–150 is fair value.