Definition. MVRV Z-Score evaluates whether BTC is overvalued or undervalued relative to its fair value by standardising the spread between market value and realized value. MVRV is the related ratio of market cap to realized cap.

Technical. Defined as the ratio between the difference of market cap and realized cap, and the standard deviation of market cap: (market cap - realized cap) / std(market cap). The standard deviation is computed cumulatively from the first available data point to the present day. Market value is network valuation by spot price multiplied by supply, while realized value represents the cumulative capital inflow into the asset. Except for BTC, realized cap values each address's full balance at its average acquisition price, following an address-based approach. For ETH tokens, burn addresses are excluded. Note that except for ETH, the market cap in this metric is computed as the sum of all on-chain balances times the price. It may be different from the metric Market Cap, which excludes locked and treasury funds and includes supply on other blockchains.

Interpretation. When market value is significantly higher than realized value, the score has typically signaled a market top (red zone). When significantly lower, it has often indicated a market bottom (green zone).