Blockchain & Cryptocurrency Glossary

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MVRV (Market-to-Realized Value)

1 min read
Pronunciation
[em-vee-ahr-vee (mahr-kit too ree-uh-lahyzd val-yoo)]
Analogy
Think of MVRV like comparing the current total resale value of all houses in a town (Market Value) to the total price everyone originally paid for their houses (Realized Value). If the current resale value is much higher, it suggests homeowners, on average, are sitting on significant profits. If it's lower, they might be at a loss.
Definition
MVRV is a blockchain analysis metric used to assess the average profit or loss of investors in a specific cryptocurrency. It's calculated by dividing the Market Value (current price multiplied by circulating supply) by the Realized Value (the aggregate value of all coins when they last moved on-chain).
Key Points Intro
The MVRV ratio helps gauge whether a cryptocurrency is currently overvalued or undervalued relative to the 'fair value' paid by investors.
Key Points

Compares current market capitalization to the aggregated cost basis of coins.

A high MVRV ratio (e.g., >3.7 for Bitcoin historically) can indicate market tops or overvaluation.

A low MVRV ratio (e.g., <1) can suggest market bottoms or undervaluation, where the average holder is at a loss.

Provides insights into investor sentiment and potential market cycles.

Example
If Bitcoin's Market Value is $1 trillion and its Realized Value is $500 billion, the MVRV ratio would be 2.0. This suggests that, on average, Bitcoin holders are currently holding coins that are worth twice what they were when they last acquired them on-chain.
Technical Deep Dive
Market Value (MV) = Current Price * Circulating Supply. Realized Value (RV) is calculated by summing the market value of each coin (or fraction of a coin) at the time it was last moved between wallets. So, if 10 BTC were last moved when BTC price was $10,000, their contribution to RV is $100,000, regardless of current BTC price. MVRV = MV / RV. Variations like MVRV Z-Score exist to normalize the metric and identify extremes more clearly. Data is sourced from on-chain analytics platforms.
Security Warning
MVRV is an indicator, not a definitive predictor of future price movements. It should be used in conjunction with other fundamental and technical analysis tools. Market manipulation or specific on-chain activities could potentially skew the metric in the short term.
Caveat
The interpretation of MVRV thresholds (what constitutes 'high' or 'low') can evolve over time and may differ between cryptocurrencies. It is most commonly applied to established cryptocurrencies like Bitcoin with significant on-chain history.
Related Terms
Market Capitalization
Bitcoin
Bull Market

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