MVRV Z-Score

Definition ∞ The MVRV Z-Score is a blockchain metric used to assess the market valuation of a cryptocurrency relative to its realized value. It is calculated by dividing the market capitalization by the realized capitalization and then subtracting 1, with the result standardized by dividing by the standard deviation of the market cap over time. This metric helps identify periods when an asset’s market price is significantly overvalued or undervalued compared to its historical cost basis.
Context ∞ The MVRV Z-Score is a frequently cited indicator in cryptocurrency analysis and news reporting, particularly for Bitcoin and Ethereum. Analysts use its readings to gauge potential market tops (when the score is high, suggesting overvaluation) or bottoms (when the score is low, indicating undervaluation). Its application provides a quantitative perspective on market sentiment and cyclical behavior within the digital asset space.