Network Value to Transactions ratio (NVT)

Woo [7] and Carter [2] , in his chapter on cryptoasset valuation, compare the Network Value to Transactions (NVT) ratio as an analog to the price-to-earnings (P/E) ratio used in traditional finance. Consequently, an elevated NVT measure could indicate a bubble and later a drawdown.

Following Woo [7] , NVT is defined as the ratio of the Market Cap of Bitcoin and the on-chain Transaction Value (volume of transactions in dollar terms):NVT = Market Cap / Transaction Value