According to on-chain data, Bitcoin’s MVRV Z-score has fallen to its lowest level in years following the price crash below the $80,000 level.
Bitcoin MVRV Z-score has plummeted recently
Glassnode analyst Chris Beamish discussed the latest trends in Bitcoin MVRV Z-score in a new post on X. Z-score is a metric that aims to estimate whether an asset is overvalued or undervalued based on a comparison of market capitalization and realized cap.
“Realized Cap” is a BTC capitalization model that calculates the total value of each token in circulation, assuming that its value is equal to the last traded price on the blockchain. In other words, what this model represents is the amount of capital that investors as a whole have put into cryptocurrencies. In contrast, market capitalization represents the value currently held.
The MVRV Z-score takes the difference between the two and divides it by the standard deviation of market capitalization. A highly positive value for the metric indicates that the market capitalization is significantly higher than the realized cap. In other words, it means investors are making a lot of money. On the other hand, if the indicator is within the negative zone, it means that the losses of the holders are predominant.
Here is a chart shared by Beamish showing the trend of Bitcoin MVRV Z-score over the past few years.
As shown in the chart above, Bitcoin’s MVRV Z-score is facing a sharp decline as the cryptocurrency’s price goes through its latest drawdown. Although this indicator is currently below the 1 level, its value is still above zero, which means that investors continue to make a net profit.
However, the degree of profitability is quite low compared to the average of recent years. The last time the MVRV Z-Score was at such a low level was in October 2023, when the asset was still trading near $29,000. “This is a solid reset of unrealized profitability, with the market returning to fair value after the last expansion,” the analyst said.
The previous cycle saw the MVRV Z-score compress to a similar level, but Bitcoin continued to fall further as the 2022 bear market tightened its grip. The cryptocurrency finally reached its lows after staying in the zone below the 0 level for a period of time. It remains to be seen what trajectory the coin will take in this cycle.
As Glassnode pointed out in the
The 90-day moving average (MA) of the Bitcoin network’s realized profit and loss ratio has fallen to 1.5, not far from the neutral level of 1. According to Glassnode, this reflects a “gradual decline in liquidity”.
BTC price
At the time of this writing, Bitcoin is trading around $76,000, down 15% from last week.
