After Bitcoin's significant decline last week, a commonly used on-chain metric for determining cycle positioning has regained attention. Data shows that the MVRV Z-Score has approached levels historically associated with multiple bear market bottoms, indicating that the market price is nearing the on-chain "realized value."
The indicator is approaching previous bottom ranges.
The MVRV Z-Score measures the deviation between Bitcoin's current market value and its realized value. Realized value is typically calculated based on the price at which each Bitcoin was last moved on-chain, making it a commonly used reference for approximate cost basis or fair value.
When the market price is significantly higher than this level, it often indicates overvaluation; when the price declines and approaches or even falls below this level, it suggests the market has entered an undervalued zone. The article cites BitBo data showing that this indicator is currently around 0.24, nearing the historical "green zone," which typically extends from near 0 to slightly below 0.
Price approaching on-chain fair value
Historically, the major cycle lows in 2011–2012, 2014, 2018, and 2022 all occurred after this indicator touched or briefly dipped below 0. In previous market cycles, this level often signaled that selling pressure was nearing its end, followed by a recovery phase.
The significance of this metric lies not in providing an exact price point, but in helping to identify where Bitcoin stands relative to its historical cycles. Compared to short-term volatility, the MVRV Z-Score places greater emphasis on whether the current market value has become significantly compressed relative to the on-chain cost basis.
The position structure has not yet been fully established.
However, the article also notes that relying solely on the MVRV Z-Score is not sufficient to confirm that the market has reached its bottom. Another important signal to watch is whether the profit and loss positions of long-term holders and short-term holders are converging.
On-chain data shows that the MVRV for long-term holders includes wallets that have held coins for more than 155 days, while the MVRV for short-term holders corresponds to wallets holding coins for less than 155 days. Historically, when the gap between the two narrows significantly, it often indicates proximity to the full cycle low.
Currently, the short-term holder MVRV is approximately 0.84, while the long-term holder MVRV is around 1.29. This indicates that long-term holders still hold significant unrealized gains, and the market has not yet fully cleared its floating profits. Based on historical cycle patterns, Bitcoin may still face additional downward pressure under these conditions.
Overall, following the recent sharp decline, some conditions that historically signaled the start of a recovery are emerging, but the positioning structure has not yet fully reached a typical bottom formation. Whether the market has completed its base-building phase still requires further observation of subsequent selling pressure and on-chain holding changes.