Definition ∞ Historical low MVRV indicates that an asset’s Market Value to Realized Value ratio has reached an exceptionally low point relative to its past performance. The MVRV ratio compares an asset’s current market capitalization to the sum of its assets at the time they last moved on-chain, serving as a gauge of whether the asset is over or undervalued. A historical low MVRV suggests that the market price is significantly below the average cost basis of all coins on the network. This often occurs during periods of extreme market capitulation and investor despair.
Context ∞ A historical low MVRV is frequently interpreted as a strong signal of potential undervaluation and a possible buying opportunity for long-term investors. It indicates that a substantial portion of the market is holding losses, suggesting that a market bottom may be near. While not a precise timing tool, it highlights moments of significant financial stress and potential value accumulation for those with a long-term outlook.
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