What is MVRV Z-score? What did MVRV confirm about Bitcoin?
An indicator called MVRV calculates the difference between market and realized capitalization levels. How does it describe Bitcoin?
What is MVRV Z-score?
An indicator called MVRV calculates the difference between market and realized capitalization levels. Values greater than one indicate that the market cap exceeds the realized cap, whereas values less than one indicate the contrary. The values are then normalized by the MVRV Z-score using a standard deviation.
Values between 7 and 9 have historically been associated with market cycle peaks, while values below 0 have done so with market cycle troughs. Since reaching a peak of 7.53 in February 2021, the indicator has been falling.
The indicator has a history of indicating that a bottom has been reached once it leaves its oversold territory. On July 20, 2022, it did so. As a result, if past performance is any indication, BTC has bottomed out.
Realized value of BTC
By using the BTC and its realized price, an indicator that gauges the price at the moment it was last transacted, it is possible to see the movement of the MVRV indicator more clearly.
BTC dropped beneath it, but it has now climbed back up to its realized price (black circle), which is at $21,700. Once the realized price is retrieved, historically, BTC has never dropped below it before starting a big bull run.
Additionally, the MVRV was negative for about 40 days (red circle), which was longer than in March 2020 but shorter than in December 2018 and January 2015.
