Understanding MVRV: How Bitcoin's Market Value Stacks Against Its True Cost Base

When evaluating Bitcoin’s price movements, one of the most powerful on-chain metrics is the MVRV (Market-Value-to-Realized-Value) ratio. This indicator compares what the market thinks Bitcoin is worth right now against what all Bitcoin holders actually paid for their coins on average. By understanding MVRV and its related metrics, investors can gain deeper insights into whether Bitcoin is overvalued or undervalued relative to its historical cost basis.

The concept of MVRV emerged from years of collaborative research into blockchain analytics, transforming how we interpret market cycles and price extremes.

The Foundation: Realized Value and Its Meaning

Before we can understand MVRV, we need to grasp the concept of realized value—the total USD value of all Bitcoin at the price each coin was last moved on-chain. On September 23, 2018, at the Baltic Honeybadger conference in Riga, Latvia, analyst Nic Carter unveiled this revolutionary concept, developed alongside Antoine Le Calvez.

The key insight is straightforward: every Bitcoin transaction on the blockchain represents a moment when someone decided to buy, sell, or spend their coins. By tracking these movements, realized value calculates the aggregate cost base of every Bitcoin in existence. Think of it as the collective “average entry price” of all Bitcoin holders combined.

Figure 1 illustrates realized value (shown in blue) against total market capitalization (shown in black). During bear markets, realized value often acts as a price floor—most holders are reluctant to sell at a loss when they believe in Bitcoin’s long-term potential.

Building the MVRV Framework: From Ratio to Z-Score

The innovation didn’t stop with realized value. Just one week after Carter’s presentation, on October 2, 2018, analysts David Puell and Murad Mahmudov took the concept further by introducing the MVRV ratio itself.

The MVRV ratio is elegantly simple: divide the current market value by the realized value. A ratio above 1.0 means the market is paying more than the aggregate cost basis—suggesting potential overvaluation. A ratio below 1.0 indicates the opposite—a potential discount to what holders originally paid.

But simplicity wasn’t the end goal. On October 9, 2018, researchers known as Awe and Wonder advanced the framework even further by creating the MVRV z-score. This metric normalizes the gap between market value and realized value by the all-time standard deviation of Bitcoin’s price. In statistical terms, it measures how many standard deviations the current price sits away from the realized value—a technique called standardization.

The beauty of the z-score approach is that it accounts for Bitcoin’s changing volatility over time. During periods of extreme price movement, the standard deviation itself increases, adjusting the metric accordingly. This makes z-scores remarkably effective for comparing different market cycles on equal footing.

MVRV Bands: Visualizing Price Thresholds Across Market Cycles

The most practical application of this research came with MVRV bands, introduced on December 15, 2020. Rather than abstractly discussing z-scores, MVRV bands translate these statistical measures into actual Bitcoin price levels.

Imagine horizontal bands on a logarithmic Bitcoin price chart, each representing a different z-score level: 0 (neutral), 2, 4, 6, 8, and 10. Each band shows the price Bitcoin would need to reach to correspond with that particular z-score of the MVRV metric. These aren’t random numbers—they’re derived from the underlying mathematics of realized value and market volatility.

What makes MVRV bands especially useful is their dynamic nature. As Bitcoin’s price volatility increases, the bands widen and slope upward, indicating that higher prices are needed to hit the same z-score levels. During market downturns, volatility often contracts, and the bands compress accordingly. Over a five-year period, you can observe how the bands expand during bull markets and contract during bear markets—a visual representation of changing market conditions.

The sensitivity to volatility also explains why MVRV bands become increasingly valuable during uncertain market environments. When price swings grow extreme, the all-time standard deviation rises, and the bands adjust to reflect new market realities.

Practical Applications and Current Context

As of February 2026, with Bitcoin trading around $73.19K, MVRV metrics remain a cornerstone of on-chain analysis. The framework helps answer critical questions: Are we in the early stages of a bull run where realized value might be left far behind? Or are we approaching a market peak where the gap between market value and cost basis suggests unsustainable valuations?

The MVRV toolkit—from the basic ratio to the z-score to the visual bands—provides multiple perspectives on the same underlying principle: the relationship between what Bitcoin holders paid and what the market currently values their holdings at.

Open-Source Innovation and Educational Value

An important note: the MVRV methodology and its derivatives remain free for anyone to replicate, modify, and expand upon. While web-based implementations have become more widely available since the original research, the R code originally shared on GitHub enabled the community to build upon this foundation.

Understanding MVRV represents an investment in financial literacy around Bitcoin’s on-chain metrics. By learning to interpret the gap between market value and realized value, you’re engaging with some of the most sophisticated analysis tools available to cryptocurrency investors today.

Disclaimer: This article is provided for educational and informational purposes only and should not be construed as financial or investment advice. Always conduct your own research before making any investment decisions.