The MVRV Z-Score evaluates whether BTC is overvalued or undervalued relative to its "fair value". Instead of using a traditional z-score method, the MVRV Z-Score uniquely compares the market value to the realized value. When the market value, measured as network valuation by spot price multiplied by supply, is significantly higher than the realized value, represented by the cumulative capital inflow into the asset, it has typically signaled a market top (red zone). Conversely, a significantly lower market value than the realized value has often indicated market bottoms (green zone).

The MVRV Z-Score is defined as the ratio between the difference of market cap and realized cap, and the standard deviation of market cap, i.e. (market cap – realized cap) / std(market cap). This formula calculates the standard deviation from the first available data point until the present day, making it a cumulative measure.

This is the Point-in-Time (PiT) variant of MVRV Z-Score. PiT metrics are strictly append-only and their history is immutable. The historic data does not necessarily reflect the best current knowledge, but the information at the time when a data point was first computed. PiT metrics are ideal candidates for applications in model backtesting and related quantitative purposes. Read our article on PiT metrics for more information.