Indicator Overview

The indicator is the Market Value to Realised Value (MVRV) ratio. This metric measures the ratio between the current market capitalisation (Market Value) and the Realised Capitalisation (Realised Value) of the asset.

The Realised Value is the aggregate cost basis of the entire circulating supply, calculated by valuing each coin at the price when it was last moved on-chain. A value above 1.0 indicates that the market as a whole is currently sitting on an aggregate unrealised profit. A value below 1.0 signifies that the market as a whole is holding at an aggregate unrealised loss.

How To Use

The MVRV ratio is a fundamental tool for identifying macro-cycle peaks and bottoms by assessing the overall profitability of the market.

Significant readings well above 1.0 (historically above 3.5 for Bitcoin) suggest the market price is far above the aggregate cost basis, meaning holders are sitting on massive unrealised profits. This indicates extreme euphoria and overvaluation, raising the likelihood of widespread profit-taking and signaling a potential macro market top.

Conversely, sustained readings below 1.0 (where the entire market is, on average, underwater) often pinpoint periods of heavy capitulation and deep value. This signals maximal fear and potential undervaluation, historically marking attractive buying or accumulation zones at cycle bottoms. The indicator is generally viewed as a mean reversion model, where the Realised Value acts as the average baseline.