Bitcoin MVRV Indicator Nears Historic Bear-Market Bottom Zone

A key Bitcoin on-chain indicator is nearing levels that have historically aligned with bear-market bottoms, suggesting the cryptocurrency may be approaching an accumulation phase after the recent sharp selloff.

CoinDesk reported on June 8 that Bitcoin’s Market Value to Realized Value, or MVRV, Z-score is approaching a range that has historically coincided with bear-market lows.

The MVRV Z-score measures how far Bitcoin’s current market value has diverged from its realized value. Realized value is based on the price at which each Bitcoin last moved on-chain. When the market price trades well above realized value, the market is generally viewed as overheated. When it nears or falls below realized value, it is typically interpreted as undervalued.

Major Bitcoin cycle bottoms have historically formed when the MVRV Z-score touched around zero or briefly fell below it, CoinDesk said. That pattern appeared in 2011-2012, 2014, late 2018 and the second half of 2022, when the indicator dropped below zero before prices bottomed and later recovered.

According to BitBo, the MVRV Z-score currently stands at 0.24. That is close to the green zone around zero that has historically been regarded as an accumulation range. The indicator does not point to a specific price level. Rather, it is a statistical measure of how compressed Bitcoin’s market value has become relative to its realized value, CoinDesk reported.

Still, the analysis said it is difficult to conclude that an absolute bottom has already formed because long-term holder MVRV and short-term holder MVRV have yet to converge.

CoinDesk reported that long-term holder MVRV, which measures the profitability of coins held for at least 155 days, remains relatively high at 1.29. By contrast, short-term holder MVRV, based on coins held for less than 155 days, stands at 0.84.

In 2015, 2019 and 2022, major cycle bottoms formed when the gap between long-term and short-term holder MVRV narrowed. For now, long-term holders are still sitting on relatively large unrealized gains, suggesting there may be room for further downside before a typical bear-market bottom is confirmed.

While predicting the exact market bottom is impossible, some of the conditions that have historically preceded a recovery began to emerge after last week’s sharp decline, CoinDesk said.

A key question for the market is whether Bitcoin can hold support in the low-$60,000 range. Although the MVRV Z-score is nearing an accumulation zone, the profitability gap between long- and short-term holders, spot ETF fund flows and a recovery in US buying demand remain the main variables in confirming a bottom.