Indicator Overview

The indicator is the MVRV Z-Score, a statistical normalisation of the Market Value to Realised Value (MVRV) ratio. It measures the deviation between the current market capitalization and the aggregate cost basis (Realised Capitalization) of all circulating coins. The Z-Score normalizes this difference by scaling it against the historical standard deviation of the market capitalization. This process provides a powerful, cycle-adjusted measure of the entire market's valuation relative to its historical norms. A positive Z-Score indicates the market is above its historical average cost basis and potentially overvalued, while a negative score signifies undervaluation.

How To Use

The MVRV Z-Score is used to identify high-probability macro-cycle extremes. Readings significantly above zero suggest the market is in a state of extreme euphoria and overvaluation relative to its historical cost. This has historically pinpointed major market peaks and signals a strong likelihood of an impending correction, making it a time for prudent profit-taking.

Conversely, readings significantly below zero signal deep market-wide capitulation or maximum pain. This indicates the market is trading well below its aggregate historical cost basis, which historically pinpoints robust buying opportunities and major cycle troughs. The indicator is highly reliable for long-term investors aiming to time extreme market turning points.