The traditional MVRV Ratio accounts for all coins in the supply, irrespective of their realized value. Thus, MVRV reflects the 'circulating supply' component of the three-region symmetry of Cointime Economics. Since Active Supply and Vaulted Supply are subsets of Circulating Supply, it can be demonstrated that MVRV may also be decomposed into an Active and a Vaulted component.
🟣 MVRV Ratio represents the classic unrealized profit/loss ratio, calculated as the ratio of the Realized Cap and Circulating Supply. As demonstrated in the Cointime Economics framework, it can be argued that this model may unfairly dilute the denominator by including lost, and inactive supply that have not contributed meaningfully to the Realized Cap. This implies that, a 'breakeven' MVRV value of 1.0 is likely masking a large proportion of economically active BTC that is held at a significant unrealized loss (being offset by the tremendous profits held by long lost supply).
🔴 Active MVRV accounts only for coins which are actively contributing to revaluing the Realized Cap through market cycles. By excluding inactive supply, Active MVRV has shown to be a more consistent and stable maximum value near historical cycle peaks. By discounting inactive Vaulted Supply, market lows are less reliably identified, as the accumulation behaviour, and thus cointime accretion that eventually establishes market floors, is discounted.
🟢 Vaulted MVRV accounts only for the relatively inactive, HODLed and/or Lost coin supply. By excluding active supply, Vaulted MVRV provides a more consistent and stable minimum value near historical cycle lows. Low values of this model represent periods where coin inactivity peaks, synonymous with a market preference for acquisition and transfer to cold storage. The Vaulted Supply denominator swells as the market saturates with higher conviction owners, whom contribute heavily to establishing bear market floors. Cycle peaks are less reliably identified as the economically active coins contributing to daily trade are discounted.
Coined By
This metric was developed within the Cointime Economics framework for Bitcoin. This project was a joint venture between Glassnode and ARK Invest, with full details available in two formats: an overview primer (Version I published via ARK) and a comprehensive guide for specialists (Version II published via Glassnode).