Bitcoin MVRV Z-Score Thresholds for Cycle Entry and Profit Taking

Summary

The indicator compares Bitcoin market capitalization with realized capitalization and offers a free-float variant that substitutes free-float market capitalization. Its Z-score expresses the gap between market and realized capitalization relative to the historical standard deviation of market capitalization. Users can choose a market-cap data source and set upper and lower thresholds. In strategy mode, crossing below the lower threshold opens a long position, while crossing above the upper threshold closes it. The document describes low readings as potential undervaluation and high readings as potential overvaluation.

The author says the calculation needs extensive historical data and frames the thresholds as historically useful for identifying Bitcoin cycle extremes. No quantified test results or evaluation method are supplied, so those claims cannot be assessed from the document. Results may depend on the selected data provider, available history, and the standard versus free-float calculation. The script is specific to Bitcoin and its strategy mode is optional; the threshold signals should be treated as an indicator hypothesis rather than proof of reliable tops or bottoms.

Key ideas

• MVRV compares market capitalization with realized capitalization, with an optional free-float market-cap version.
• The Z-score scales the gap between market and realized capitalization by historical market-cap variability.
• The strategy enters long below a lower threshold and closes above an upper threshold.
• The calculation depends on long historical data and selected market-cap data sources.
• The document offers no quantified evidence establishing the reliability of the cycle signals.

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