The Head of Research at CryptoQuant has revealed why it may be too early to call a bottom for Bitcoin, based on the trend in on-chain data.
Bitcoin MVRV Z-Score Has Plunged Under Its 365-Day MA
In a new post on X, CryptoQuant Head of Research Julio Moreno discussed why Bitcoin may not have reached a bottom yet. “All valuation metrics are in correction territory,” notes the analyst. “It can take more time.”
An indicator that Moreno has cited as an example of this trend is the Market Value to Realized Value (MVRV) Z-Score. This metric essentially evaluates how the market cap of Bitcoin compares against its realized cap.
The “realized cap” is an on-chain capitalization model that calculates the total value of Bitcoin’s supply by assuming that each token in circulation has its true value equal to the spot price at which it was last transacted on the blockchain.
In simpler terms, the realized cap aggregates the cost basis of the cryptocurrency’s supply, providing an insight into the total capital invested in Bitcoin by its users. By comparing the market cap—which indicates the current value held by investors—against this initial investment, the MVRV Z-Score serves as a gauge of the profit-loss status within the Bitcoin user community.
The MVRV Z-Score resembles the widely recognized MVRV Ratio, yet it stands apart by employing a standard deviation test to identify extremes in the data.
Below is the chart shared by Moreno, illustrating the trend in Bitcoin’s MVRV Z-Score alongside its 365-day moving average (MA) over the past few years:
The graph clearly indicates a sharp decline in the Bitcoin MVRV Z-Score, attributed largely to the recent price crash, which has left many investors in a loss position.
Despite this decline, the metric remains above the zero mark, a crucial threshold. Historically, falling below this level signals that the overall market is in a state of loss—a boundary that has proven significant for the cryptocurrency.
However, it is worth noting that the MVRV Z-Score has dropped below its 365-day MA. Past occurrences where the metric fell below this line have typically resulted in prolonged struggles for Bitcoin’s price, as highlighted by the analyst in the chart.
The question now is how long Bitcoin will remain below this key level before its price eventually finds a bottom.
BTC Price
As of this writing, Bitcoin is trading around $86,300, reflecting a decline of over 11% in the past week.
