MVRV
MVRV (Market Value Realized Value) is a ratio of the market capitalization (Market Cap) of a cryptocurrency to the asset’s price of this currency one day before.
- Market Value:
It consists of the current market price of the cryptocurrency and the total supply it has. Namely, the whole value of the market at its present price. - Realized Value:
The last price it was transferred at is multiplied by the total supply for each cryptocurrency. This is the total value of the cryptocurrency at that particular price.
MVRV Calculation
MVRV = Market Value / Realized Value
Meaning of MVRV
- Overbought and Oversold Conditions:
High MVRV: This refers to a situation where the market capitalization is high relative to the realized value. It means that the market price is historically high and investors are basically making money. In this case, the market may be overbought.
Low MVRV: This means that the market value is low relative to realized value. Market price is historically low and investors are in fact losers. In this case, the market may be oversold.
- Market Psychology:
The MVRV ratio reflects the general attitude and behavior of market participants in profit or loss situations. High MVRV may be seen as suggesting that investors have greater confidence in making a profit, which might lead to higher prices. Low MVRV may be seen as an indication of more cautious investor attitude and consequently higher prices may be bartered. - Trend and Price Analysis
Changes in the MVRV ratio can be used to understand changes in valuations of a cryptocurrency and trends that might emerge in the market. In particular, extremely high or low MVRV values can be taken as indicators of a market able to turn.
MVRV Z-Score
Tells to what extent MVRV is exceeding or falling behind historical average. It assesses how “extreme” or “low” MVRV is in context and categorizes how far from historical norms it has moved.
MVRV-Z-Score Calculation:
MVRV-Z-Score = (MVRV – Average MVRV) / Standard Deviation
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Average MVRV: Historical average of MVRV.
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Standard Deviation: Historical standard deviation of MVRV.
Examples:
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Example: If a virtual currency has an MVRV rate of 2.5, it means the market is highly overvalued and traders are generally in profit. That could mean that the price is inflated and there may be a correction.
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If the MVRV-Z-Score is 3.0, it has moved away from historic averaging (hope high mark). This could indicate that the market is at a local top and has a relatively higher chance of a reversal.
During the chart curve, when the Realized Value is greater than the Market Value, marks at which MVRV data shows selling appear (yellow point). This hints at a likely turnaround. On the other hand, comparing MVRV Z-Score with historical averages (red point in chart) shows period intervals in which it is quoted significantly higher than historical level values. This may be a time to sell rather than buy.
Revised Academic Conclusion
Our paper has demonstrated an effective approach for identifying whether the cryptocurrency market is overvalued or undervalued by analysing historical sentiment indicators such as MVRV and the Z-Score. When used in conjunction, these metrics complement each other: beyond reflecting shifts in investor sentiment, they also highlight significant historical inflection points when Z-Scores move into positive territory.
For a more comprehensive analysis, these metrics should be applied alongside additional on-chain indicators. These may include trading volume, volatility measurements, liquidity data, and broader regulatory or structural market signals. Incorporating multiple data sources enhances analytical accuracy and supports more informed strategic decisions.
Ultimately, elevated MVRV levels may suggest heightened correction risk, whereas lower MVRV levels may indicate potential accumulation zones. However, given the rapid and often unpredictable shifts in market conditions, it remains essential to maintain disciplined risk management when integrating MVRV into a trading or investment framework.limer
Disclaimer
The information, analyses, and interpretations presented in this paper are provided solely for educational and informational purposes. Nothing contained herein should be construed as financial advice, investment guidance, trading recommendations, or legal counsel.
Cryptocurrency markets are inherently volatile and speculative. Indicators such as MVRV and MVRV Z-Score offer analytical perspectives but do not guarantee predictive accuracy or future market outcomes. Any trading or investment decisions made on the basis of this material are done entirely at the reader’s own risk.
Readers are strongly encouraged to conduct independent research (DYOR), assess their personal financial circumstances, and consult with a licensed financial advisor or qualified professional prior to making any investment decisions involving digital assets.
The authors and publishers assume no responsibility for any financial losses, damages, or adverse outcomes resulting from the use, interpretation, or application of the information contained in this work. Past performance and historical metrics are not indicative of future results.
