Bitaigen Research Today we introduce the MVRV metric that many analysts use to forecast Bitcoin’s market cycles. By looking at this metric, you can gauge where the market currently sits.
The Bitcoin MVRV metric measures the ratio of Bitcoin’s market value to its realized value, helping to determine whether the market is in profit or loss and to identify cyclical bottoms and market stages.
In this article we systematically outline the definition, calculation method, and practical significance of the Bitcoin MVRV metric across different market phases. This helps investors assess whether the market is over‑ or undervalued from the perspective of on‑chain realized cost and offers a framework for spotting potential turning points. To see how this metric can support decision‑making, keep reading.
What is the Bitcoin MVRV metric?
MVRV ratio = MV / RV, representing the average multiple of profit for on‑chain addresses.
- MV (Market Value) is Bitcoin’s market capitalization, i.e., circulating supply multiplied by the current trading price (generally quoted in USD).
- RV (Realised Value) is the sum of the market values of all bitcoins at the price of their last on‑chain transaction, reflecting the actual cost basis of holders.
Market capitalization is a common gauge of a crypto asset’s size and can be viewed on platforms such as CoinMarketCap sorted by market cap. Traditional market‑cap calculations do not account for the roughly 15 % of bitcoins that may be permanently lost or lack liquidity, which can lead to an overstatement of the true market value.
Note: When converting fiat values, use USD for global reference and SEPA/SWIFT for cross‑border transfers. U.S. residents should trade on Binance.US rather than the global Binance platform. Crypto gains may be subject to tax in your jurisdiction; consult a tax professional for guidance.
Functions of the Bitcoin MVRV metric
By comparing Nominal Market Value (MV) with Realised Value (RV), you can observe the market’s current phase:
- MV > RV: Overall profit, market sentiment leans optimistic.
- MV < RV: Overall loss, market sentiment leans pessimistic.
Identifying cyclical bottoms
On a logarithmic chart of Bitcoin’s historical cycles, the RV curve forms a step‑like pattern: the rising phases are almost vertical, followed by prolonged horizontal plateaus.
- When MV stays below or equal to RV for an extended period, it often signals that a bear market has reached its bottom, offering a potential buying opportunity.
- When MV spikes far above RV, investor enthusiasm may be excessive; conversely, a multi‑month stretch of MV below RV can indicate heightened fear.
Determining market stages
| Market Stage | RV Trend Characteristics | Description |
|---|---|---|
| Bull market | RV rises steeply | Holders who bought at low cost are taking profits; the steeper the curve, the larger the gains. |
| Bear market | RV declines slowly | A large amount of tokens are being moved off‑chain, and new entrants incur losses. |
| Accumulation phase (end of bear / start of bull) | RV shifts from flat to a gentle upward slope | Investors begin buying at low levels and hold for the long term. |
MVRV Z‑Score
MVRV Z‑Score is used to assess how “fairly valued” Bitcoin is relative to its historical norm. It is defined as:
\[
\text{MVRV Z‑Score} = \frac{MV - RV}{\sigma
\]
*(The equation continues as defined in the original source.)*
Related Reading
- Bitcoin Spot ETFs Face $200M Outflows Amid Bullish Push
- Bitcoin Breaks Upward Channel: Technical & Funding Analysis
- Bitcoin $90,000 Rejection: Is Digital Gold Losing to Bonds?
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