A beginner’s guide to reading Bitcoin’s MVRV Z-score

The mechanics of the metric

The MVRV Z-score uses three metrics to assess Bitcoin. Market Value multiplies the current price by the circulating supply. Realized Value takes the price of each Bitcoin when it last moved on-chain, averages those prices, and multiplies the average by the total coins. This process strips out short-term market sentiment. The Z-score calculates the standard deviation between these two values to identify valuation extremes. Murad Mahmudov and David Puell developed the initial MVRV, which @aweandwonder refined. While the MVRV ratio shows broad trends of overbought or oversold conditions, the Z-score is more effective at identifying specific market cycle tops and bottoms. The tool uses the difference between market value and realized value, normalized by volatility, to show how unusual current market conditions are. A Z-score above 5 suggests an overbought market, while a score below 0 indicates the market is undervalued.

Metric	Calculation	Purpose
Market Value	Price $\times$ Supply	Shows current market sentiment
Realized Value	Avg. price at last move $\times$ Supply	Shows aggregate cost basis
Z-Score	(MV – RV) / SD	Shows valuation extremes

The math is cold.

You know the basics, but I focus on the spread between market cap and the cost basis of holders.

Reading the signals

The September 3.2 reading indicates Bitcoin sits near historical undervaluation. In 2017 and 2021, the Z-score exceeded 7, which signaled extreme overvaluation. I skip the hype. Historically, the Z-score dropped below 0 in 2011, 2015, 2019, and 2022. These green zone entries signaled market bottoms. The 2022 bottom followed the November 2022 FTX collapse. That collapse exposed an $8 billion hole in accounts and caused the Bitcoin price to fall to its lowest level in two years. I find the volatility in these periods disgusting.

The reading is low.

When the Z-score enters the red zone, it has historically signaled market cycle tops, such as in 2011, 2013, 2017, and 2021, when the price moved unusually high above the realized value after periods of extreme speculation. The 3.2 reading stays well below those historic peaks. I think the 3.2 level shows a different stage of the cycle. The Z-score is currently above the green zone, but it stays below the levels seen during the 2017 and 2021 peaks.

The divergence problem

A divergence exists between the Z-score and the weekly Relative Strength Index. The weekly RSI hit 35.90 in April 2026. This entered oversold territory for the first time since June 2022. In June 2022, the price went on to fall a further 41.67% before finding its ultimate cycle low in November of that year. Usually, these two signals coincide at major bottoms. In 2015, 2018, and 2022, the RSI entered oversold territory at the same time the Z-score entered the green zone. Does the current mismatch mean more downside remains?

The market ignores historical patterns. Global liquidity follows a 65-month cycle. It peaked in late 2025. I see the current contraction as a headwind. Bitcoin moves in the same direction as global liquidity approximately 83% of the time over any given 12-month period. For every 1% change in global liquidity, Bitcoin moves by roughly 7.6x over the following quarter. In the last cycle, the Z-score only reached around 7. This suggests the magnitude of the next cycle’s upside may look different from previous ones. The debt refinancing wall also absorbs liquidity as governments roll over low-rate debt into high-rate debt. The US faces $3 to $4 trillion in annual refinancing needs through 2029. This absorbs liquidity into interest payments. I believe the 3.2 reading matters because it sits above the zero level but remains far from the peaks seen in previous years.