The NVT ratio, or network value to transactions ratio, divides a token network's market capitalization by the value of transactions settling on its chain. Willy Woo proposed it for Bitcoin in 2017 as a rough analogue of a stock's price to earnings ratio, using money flowing through the network as the stand-in for earnings because a blockchain has none. It is a crypto-native valuation metric, and its usefulness depends entirely on whether the chain still sees the activity it is meant to measure.
NVT assumes onchain transaction value is a fair proxy for network usage. As settlement moves to layer 2s, exchange internal ledgers and off-chain rails, the denominator shrinks for reasons that have nothing to do with valuation, and the ratio drifts upward on its own.
What the ratio divides by what
Network value, meaning market capitalization, goes on top. The daily value of transactions settling on the chain goes underneath. Woo's reasoning for the second term was direct: in traditional markets the price to earnings ratio compares a share price to earnings per share, but Bitcoin is not a company and has no earnings, so the money flowing through the network stands in as the proxy.1
Woo also named his data source at the time, noting that the estimate of daily onchain transaction value came from blockchain.info.1 That detail is worth carrying forward, because the denominator is an estimate produced by a third party applying its own filters, and different estimators produce different NVT readings for the same chain on the same day.
Where it came from, and who named it
The origin is unusually well documented for a crypto metric. Woo wrote that in February 2017 he tweeted a chart presenting the idea of a price to earnings ratio for Bitcoin, something he temporarily called the MTV ratio, before Chris Burniske suggested the less confusing term NVT ratio, for network value to transactions ratio. Burniske then presented it publicly at Token Summit 2017 in May.1 Woo published the same account on Forbes in September 2017.2
So the metric is a practitioner construction from a specific pair of people at a specific moment, not something inherited from finance or derived from a model. That is not a criticism. It is context for how much weight it can carry.
The 2017 reading that built its reputation
One episode does most of the work in NVT's reputation. In December 2017, a few days before Bitcoin peaked at $19,783, the ratio printed a reading of 175, well past the red zone threshold of around 150 that its own creators had drawn. Within four days the market reversed, and the decline that followed eventually reached 84%, carrying the price to $3,122 by the end of 2018.3
That is a documented sequence, and it is also a single observation. One correct reading in one cycle is an anecdote rather than a track record, and this page makes no claim about what any reading of this or any other indicator implies about future prices.
The denominator is quietly shrinking
The more interesting argument against NVT is structural rather than statistical. BTCtiming's 2026 analysis argues the ratio has become less reliable not because the market learned it and neutralised it, but because the share of real settlement that actually happens onchain has shrunk.3 Trades that clear inside an exchange's own ledger never touch the chain. Activity on layer 2 networks settles in compressed batches. Custodial transfers between clients of the same institution are database writes.
All of that removes value from the denominator while the numerator carries on. The ratio therefore drifts upward over years for reasons unrelated to valuation, which means any fixed threshold calibrated on 2017 data is measuring a different network than the one it is applied to. Every onchain metric built on transfer volume carries a version of this problem.
What it is worth to a token designer
For most tokens, not much, and that is the useful conclusion. NVT was built for a monetary network where onchain transfer value genuinely is the throughput. Apply it to a governance token, a liquid staking token or a token whose activity happens in application contracts rather than in transfers, and the denominator measures something close to noise.
Where it is worth computing is a chain or payment token you operate, tracked against its own history with the estimator held constant, as one input beside fee revenue and active addresses. Treat the level as meaningless and the trend as a prompt. If your network value is climbing while settled value is flat, that is a question to answer with product data, not a signal to act on.
Common questions
What is the NVT ratio in crypto?
The NVT ratio divides a network's market capitalization by the value of transactions settling on its chain. Willy Woo proposed it for Bitcoin in 2017 as a rough analogue of a stock's price to earnings ratio, using money flowing through the network as the proxy for earnings, since a blockchain has no earnings in the traditional sense.1 A high reading means valuation is large relative to settled activity.
Who created the NVT ratio?
Willy Woo proposed it in February 2017, initially calling it the MTV ratio. Chris Burniske suggested the name NVT ratio, for network value to transactions ratio, and first presented it publicly at Token Summit 2017 that May.1 Woo published the full account on woobull.com in October 2017 and on Forbes the previous month.2
Is the NVT ratio still reliable?
Its denominator has weakened. A 2026 analysis argues the ratio has drifted because the share of real settlement happening onchain has structurally shrunk, as exchange internal ledgers, layer 2 batching and custodial transfers move activity off the base chain.3 Thresholds calibrated on 2017 data are being applied to a network that settles a different fraction of its activity onchain, so the level is not comparable across eras.
See Tokenomics Audit for how this applies in practice.
Sources
- Introducing NVT Ratio (Bitcoin's PE Ratio), use it to detect bubbles
Willy Woo, woobull.com, 2017
Origin account, the naming by Chris Burniske, the Token Summit 2017 debut, the price to earnings analogy and the blockchain.info data source. - Is Bitcoin In A Bubble? Check The NVT Ratio
Forbes, Willy Woo, 2017
Same origin account published under a dated byline on a second platform, corroborating the timeline. - Bitcoin's 'P/E Ratio' Is Quietly Losing Its Edge
BTCtiming Research, 2026
Documents the December 2017 reading of 175 against a red zone near 150, the subsequent 84% decline to $3,122, and the argument that shrinking onchain settlement share is distorting the denominator.
Last reviewed 2026-08
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