Market Value to Realized Value (MVRV)

Imagine you run a mango stand. The mangos on your shelves are worth a certain amount if you sold them all today, and this is your market value.

Now, think about how much you actually paid for those mangos when you bought them from the supplier. That is your realized value.

The difference between these two numbers can tell you a lot.

If today’s mango prices are much higher than what you paid, you are sitting on big profits, but you are also at greater risk if prices fall.

In cryptocurrency, the MVRV Ratio works in a similar way. It compares the current total value of all coins, which is the market value, to what investors actually paid for them, the realized value.

This helps you see whether the market as a whole is sitting on profits or losses, and whether it might be overheated or undervalued.

📖 What is the MVRV Ratio?

MVRV stands for “Market Value to Realized Value” ratio.

It’s an on-chain metric in cryptocurrency analysis that compares the current market capitalization of a crypto asset (like bitcoin) to its realized capitalization.

Basically, it compares the market price to the average cost basis of all coins in circulation.

It’s used to assess whether bitcoin is overvalued or undervalued relative to the average price at which coins last moved on-chain.

How is MVRV Calculated?

MVRV = Market Value ÷ Realized Value

Where:

Market Value (MV):

Also called “market capitalization” (or “market cap”).
This is simply the current price of the asset multiplied by the total supply of coins.
Formula: Market Value = Current Price × Total Circulating Supply
For bitcoin, this is the figure you’d see on coin tracking sites. It shows what the whole network is “worth” at today’s prices.

Realized Value (RV):

This is where on-chain analysis gets interesting!
Instead of using the current price for every coin, realized value calculates the value based on the price each coin last moved on-chain.
How it works:
- Imagine every bitcoin in existence.
- For each coin, look at the price when it was last sent or moved on the blockchain.
- Add up the value of all those coins at the price they were last moved.
This creates a picture of the “true economic value” in the network, representing what investors actually paid for their coins, not what they could sell them for today.

What Does MVRV Indicate?

MVRV > 1: Holders are in profit on average
- Values above 3.5 have historically signaled market tops, as large unrealized profits incentivize selling
MVRV < 1: Holders are at a loss on average
- Often indicates undervaluation and has coincided with market bottoms
Mean Reversion: MVRV tends to revert to its mean over time, making it useful for identifying potential market tops and bottoms

🔍 How to Read the Chart

This chart titled “Bitcoin: MVRV Ratio” tracks the relationship between:

🟣 Blue Line: MVRV Ratio (Market Value to Realized Value)
⚫ Black Line: Bitcoin Price in USD

📈 Interpreting the Chart

MVRV > 1: Investors are in profit.
Higher MVRV values suggest increasing unrealized profits, which may lead to profit-taking or corrections.
Sharp drops in MVRV typically align with corrections or capitulation events.

In the shown chart, we can observe:

In late 2024, the MVRV spiked sharply alongside a major BTC price rally – a sign of strong unrealized profits.
By March-April 2025, both price and MVRV dropped significantly – likely from profit-taking and market correction.
As of May 2025, MVRV is rising again, currently around 2.2, indicating a recovery phase, with BTC price back above $100,000.

🧠 Why Traders Care

High MVRV values (historically above 3.5 for BTC) indicate that the market price is much higher than the average cost basis of holders.
- This means most investors are sitting on large unrealized profits, increasing the likelihood of profit-taking and signaling a potentially risky, overvalued market or cycle top.
Low MVRV values (below 1) suggest the market price is below the average cost basis, meaning many holders are at a loss.
- Historically, these zones have coincided with market bottoms and accumulation phases, representing potentially profitable entry points.

Why It’s a Macro Cycle Indicator

Cycle Tops and Bottoms: MVRV helps identify macro cycle extremes, such as when the market is overheated (risk of correction) or capitulated (potential for recovery).
Investor Behavior: By showing the aggregate unrealized profit or loss, it reflects the psychological state of the market, such as greed at the tops or fear at the bottoms.
Historical Reliability: MVRV has consistently signaled major market tops and bottoms across multiple cycles, making it a reliable tool for timing long-term entries and exits.

🟠 Summary Table

MVRV is an on-chain metric used to gauge whether a crypto asset like bitcoin is currently overvalued, undervalued, or near its “fair” value based on on-chain investor activity.

MVRV Value	Interpretation	Signal
> 3.5-4.0	High unrealized profits	Market top risk
2.0-3.0	Growing profits	Bullish, monitor for profit-taking
1.0-2.0	Modest profits	Accumulation / early bull phase
< 1.0	Investors underwater	Potential bottom / fear zone

In summary, MVRV is powerful because it quantifies crowd profitability and signals when the market is likely to shift from greed to fear (or vice versa), helping you to identify when to be cautious or opportunistic.