MVRV stands for the ratio of an asset’s market value (primarily used for BTC analysis) to its realized value. The indicator helps to determine whether the price of BTC is overvalued or undervalued at a certain point in time.

If you look at the MVRV chart, its extremes will fall on the main peaks and bottoms of the cycles. The blue line on the chart is MVRV. The black line is the BTC price.

Now MVRV has crept close to 1. Historically, values ​​at the level of 0.8–0.9 coincided with the bottom of the cycle.

How is it calculated?

The formula looks like this:

MVRV = Market Value / Realized Value.

The first variable is the market value, which is simple: it is the price multiplied by the number of coins in circulation.

The second variable is the realized value, which is equal to the cost of all the coins on the market. What does “cost” mean in this context? This is the price that was paid for all bitcoins. It can be calculated by analyzing on-chain data. You need to look at when bitcoins were last moved from one wallet to another and what was the price at that moment. These data are then summed up to get their total value.

We would like to emphasize that the interpretation of MVRV should not be approached in an automatic mode and abruptly start buying after its decline. In 2015, he dangled under the unit for almost the entire year, in 2018–19 — about six months; all this time, the price of BTC was in the sideways. And in March 2020, MVRV only briefly went under one and quickly recovered. How long the accumulation will last this time and at what price levels it will stabilize, no one knows. You can track the indicator, for example, here.

Always remember that the speculator’s main tool is his eyes and mind, and there are no magic solutions. This indicator, like many others, is just a reference that can be used in conjunction with a huge number of other market factors when making decisions. DYOR, NFA and stop shorting the market already!