MVRV Z-Score

There are two ways to value the whole network. Market cap is today's price times the number of coins in existence. Realized cap prices each coin at whatever it was worth the last time it moved between wallets, then adds those up, which approximates what owners collectively paid.

The difference is profit that exists on paper but nobody has taken. That dollar figure grows as Bitcoin grows, so the same gap means different things at different network sizes. Dividing by the standard deviation fixes that. Standard deviation is simply a measure of how much a number normally bounces around, so dividing by it converts the gap from dollars into a count of how many typical swings away from normal today sits.

Zero means the two valuations are equal: the average coin is worth exactly what was paid for it. Below zero the network is collectively underwater. The higher the score climbs, the further price has pulled away from what owners paid.

The target zones marked above the chart are fitted to where the score has sat at past cycle extremes, and are recalculated each time a cycle turns, which is why they step rather than run flat.

In Bitcoin's earliest completed cycle, the score's highest reading came within days of the final price peak. In every cycle since, the high has arrived well before the market's actual top, in one case the better part of a year early, and had already fallen back by the time price peaked. The low side has been more consistent: the score has spent time at or below zero in the months around each major cycle low.

The peak reading has also come in lower with every successive cycle so far.

The standard deviation grows as Bitcoin's price history lengthens, which mechanically pushes peak readings down from one cycle to the next. A threshold fixed once therefore drifts out of reach on its own, without the market having changed. The targets here are recalculated against the score's own contracting range for that reason, so the compression is accounted for rather than left to erode them.

Realized cap treats every on-chain movement as though the coin were bought at that moment. Someone shuffling coins between their own wallets, or Bitcoin moving into and out of exchange and ETF custody, resets the recorded cost basis without anyone actually buying or selling.