MVRV Indicator: Finding Bitcoin's Fair Value
MVRV Indicator: Finding Bitcoin’s Fair Value
Section titled “MVRV Indicator: Finding Bitcoin’s Fair Value”MVRV is a classic on-chain valuation indicator created by David Puell and Murad Mahmudov. It is highly effective at identifying macro cycle tops and bottoms.
1. Core Definition
Section titled “1. Core Definition”MVRV = Market Value (MV) / Realized Value (RV)
- Market Value (MV): The total market capitalization (Current Price × Circulating Supply). It represents how the market currently values the asset.
- Realized Value (RV): The sum of the value of all bitcoins at the price each was last moved on the blockchain. It reflects the “aggregate cost basis” or “value paid” by all holders.
2. Meaning of the Values
Section titled “2. Meaning of the Values”Changes in the MVRV ratio reflect the average profit state of holders:
- MVRV < 1.0: The current market value is lower than the cost basis. This means, on average, market holders are underwater. Historically, MVRV < 1.0 has been a reliable signal for macro bottoms.
- MVRV > 3.0: The current market value is significantly higher than the cost basis. This implies holders have massive unrealized profits, and market sentiment is typically overly optimistic. Selling pressure often builds here. Historical cycle peaks usually occur when MVRV reaches 3.5 or higher.
3. Application
Section titled “3. Application”MVRV acts like a thermometer for market profit pressure:
- Bottom Detection: Identifying extremely undervalued entry points.
- High-Level Warning: Signaling the accumulation of a macro bubble when the ratio stays at elevated levels.
Disclaimer: Content provided on this page is for informational and educational purposes only. Data is based on on-chain statistical models.