What is MVRV Z-Score Chart?
1. **Market Value**:
It is the number of BTC in circulation multiplied by the current price of Bitcoin. We can take this value as market value.
2. **Realized Value**:
Instead of getting the current price of Bitcoin, we get the price of each Bitcoin when it was last moved, that is, when it was last sent from one wallet to another. We then add up all these individual prices and average them. We then multiply this average price by the total number of BTC in circulation.
3. **Z-Score**:
It is a standard deviation test that reveals extremes in data between market value and real value. When the market value is significantly higher than the realized value, it is indicated by the "red zone", while the opposite market bottoms are detected by the "green zone".
Historically, the MVRV Z-Score has been effective in identifying periods when market value unusually exceeds realized value. These periods are highlighted by the z-score (red line), which falls into the red zone and indicates the peak of market cycles. Additionally, when the z-score falls into the green box, it indicates that the market value is well below the realized value. Buying Bitcoin during these times has yielded huge profits. However, it should be noted that the MVRV Z-Score does not calculate lost idle coins and simply divides the current price by coins “in circulation.” MVRV-Z can be a guide, but it is useless on its own.
The **MVRV-Z** indicator can be used not only for Bitcoin but also for other cryptocurrencies. If you want to examine the MVRV-Z values of other cryptocurrencies, you can follow the steps below:
1. **Find Data of Other Cryptocurrencies**:
Find the realized value and market value of the cryptocurrencies you are interested in. You can usually find this data on cryptocurrency exchange websites or cryptocurrency tracking platforms.
2. **MVRV-Z Calculation**:
Calculate MVRV-Z for each cryptocurrency. When you divide the realized value by the market value, you get the MVRV-Z value. This indicates whether the cryptocurrency is overvalued or undervalued.
3. **Watch Chart**:
Track MVRV-Z values over time and create graphs. This shows how high or low the price of the cryptocurrency is relative to its realized value.
Remember that the MVRV-Z value is only an indicator and does not accurately predict the future performance of cryptocurrencies. However, it is possible to understand and evaluate market trends using this indicator. You can refer to cryptocurrency analysis platforms for more information.
**MVRV-Z values**,
It is useful for understanding the relationship between the intrinsic value and market value of an asset in the cryptocurrency market. Here are some situations where this indicator comes in handy:
1. **Price Tops and Bottoms**:
The MVRV-Z value shows how high or low the market value is relative to its real value. While high MVRV-Z values are observed at price peaks (red zone), low MVRV-Z values are observed at price bottoms (green zone). This can help identify the tops and bottoms of market cycles.
2. **Overestimation and Underestimation Detection**:
If the MVRV-Z value for a cryptocurrency is high, it means it is overvalued. Conversely, low MVRV-Z values indicate underestimation. This information can be used to support investors' buying or selling decisions.
3. **Investment Opportunities**:
The MVRV-Z value may present investment opportunities when the market value is well below the actual value. If the MVRV-Z value falls into the green box, this indicates that the cryptocurrency is potentially cheap.
4. **Risk Management**:
High MVRV-Z values may increase the risk of an overvalued asset. Low MVRV-Z values may be a sign of a low-risk asset.
However, it should not be forgotten that the MVRV-Z value is only an indicator and does not give definitive results. It should be used in conjunction with other analysis methods. It is important to do careful research before investing.
