Bitcoin MVRV Z-Score
An indicator used to analyze whether Bitcoin is overvalued or undervalued relative to its actual value.
MVRV Z-Score Chart
What is MVRV Z-Score?
The MVRV-Z score is a relative indicator, which is the "circulating market value" of Bitcoin minus the "realized market value", and then standardized by the standard of the circulating market value. The formula is:
MVRV-Z Score = (circulation market capitalization - realized market capitalization) / Standard Deviation (circulation market capitalization)
The "realized market value" is based on the value of transactions on the Bitcoin chain, calculating the sum of the "last movement value" of all Bitcoins on the chain. Therefore, when this indicator is too high, it means that the market value of Bitcoin is overvalued relative to its actual value, which is detrimental to the price of Bitcoin; otherwise, it means that the market value of Bitcoin is undervalued. According to past historical experience, when this indicator is at a historical high, the probability of a downward trend in Bitcoin prices increases, and attention should be paid to the risks of chasing higher prices.
