Bitcoin MVRV Z-Score and Free-Float Valuation Signals

Summary

This indicator compares Bitcoin market value with realized value using the MVRV ratio, then calculates a Z-score from the difference between market and realized capitalization relative to historical market-cap variation. A free-float option substitutes free-float market capitalization for ordinary market capitalization, and the source offers alternative market-cap data sources. In strategy mode, the example enters long when the Z-score crosses below a lower threshold and closes the position when it crosses above an upper threshold. The stated example thresholds are 0.1 and 7.

The document presents these levels as historically useful for identifying Bitcoin bottoms and tops, but supplies no performance data or validation method to support that claim. It also says the calculation needs a long history, so results depend on the available data and the selected source. The script is a long-only threshold example: the upper signal closes a position rather than opening a short. The text explains the valuation measures, but does not establish that the thresholds predict future prices or remain reliable across market conditions.

Key ideas

• MVRV divides market capitalization by realized capitalization.
• The Z-score scales the difference between market and realized capitalization by historical market-cap variation.
• The free-float option uses free-float market capitalization in place of ordinary market capitalization.
• In strategy mode, a lower-threshold cross opens a long and an upper-threshold cross closes it.
• The document offers no empirical validation for its claims about market tops and bottoms.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.