{"uuid":"76006565-1fbe-41b7-4929-9a1c6f0365a3","categoryUuid":"752fce11-1913-47e4-5707-91c0b669f02b","data":{"meta":{"name":"BTC: Mastering the MVRV Ratio"},"configs":[{"meta":{"date":1676937600000,"asset":"BTC","since":1279324800000,"until":1676937600000,"currency":"native","metricCode":"market.Mvrv","resolution":"24h"},"uuid":"a1d4da3d-8d7f-43ba-95c0-9ea8c1c61d03","extra":{"price":true,"scale":"lin","lineColor":"#f7931a","chartStyle":"line"},"configType":"metric"},{"meta":{"refUuid":"70aa2400-53ee-4cb3-477e-b55793aa210a"},"uuid":"84b7ed9f-05bd-4e51-9846-98555ab1f0a9","configType":"workbench"},{"meta":{"refUuid":"0d837208-ccef-4f87-6a0c-d5ec0374a071"},"uuid":"493823e2-a37b-43c0-8c4d-9434be453d73","extra":{"zoom":"All"},"configType":"workbench"},{"meta":{"refUuid":"a2f6be5e-45c1-4ff2-78fb-544f648d1fa4"},"uuid":"2e5af448-f826-4438-ba85-a0f602000bb1","extra":{"zoom":"5y"},"configType":"workbench"},{"meta":{"refUuid":"6d2b953a-b635-4195-5dfe-c65e2a53b068"},"uuid":"ace27fe1-e123-4874-8e47-42b742104b2f","extra":{"zoom":"5y"},"configType":"workbench"},{"meta":{"refUuid":"61f07f1a-02a4-4fea-708f-5dbd209e6621"},"uuid":"41d814c2-49f2-4964-b930-729520797f8a","extra":{"zoom":"All"},"configType":"workbench"},{"meta":{"refUuid":"3f50d5e7-2c9e-4c74-4d34-159330c188cb"},"uuid":"50189fce-7e62-47be-b297-b47b3dcc7d21","extra":{"zoom":"5y"},"configType":"workbench"},{"meta":{"refUuid":"f9a54851-8b37-4f2a-5517-900c3f3152f1"},"uuid":"dbd5560a-ce74-47c9-9b95-64e0ab21005c","configType":"workbench"},{"meta":{"content":"## 〰️ Mastering the MVRV Ratio 〰️\n\n---\n\nThe MVRV Ratio is one of the most popular and widely used on-chain metrics. It was first conceived by on-chain pioneers Murad Mahmudov and David Puell, in a [paper released in October 2018](https://medium.com/@kenoshaking/bitcoin-market-value-to-realized-value-mvrv-ratio-3ebc914dbaee), and has become a staple Bitcoin analysis tool ever since.\n\nThe MVRV Ratio is often viewed as a macro oscillator, useful for exploring Bitcoin market cycles, and particularly for spotting tops and bottoms. Whilst this is true, the MVRV is actually a far more nuanced, and information dense metric than many analysts realize.\n\n**📰 Read our full report here: [Mastering the MVRV Ratio](https://insights.glassnode.com/mastering-the-mvrv-ratio/).**\n\n---\n\nIn this dashboard, we explore the MVRV Ratio, starting at the foundations, and traveling right through to more advanced insights. Our goal is to demonstrate the mechanics that make MVRV tick, and explore what makes this indicator such a powerful tool in our belt. We will cover three topics:\n\n1. **Exploring Extreme Values** of the MVRV for spotting cycle tops and bottoms.\n\n2. **MVRV Momentum** and how to use the indicator to track macro bull/bear trends.\n\n3. **Distribution Divergences** showing how MVRV often gives advanced warning of cycle tops that are experiencing heavy distribution (sell-side pressure).\n\n---\n\nMVRV is shorthand for Market Value (MV) to Realized Value (RV), and is the ratio between Price, and the Realized Price. Since the Realized Price is the average price at which every coin last moved on-chain, MVRV can be thought of as a measure of 'Unrealized Pofit' held within the supply.\n\n- **A MVRV of 2.2** means Price is 2.2x the Realized Price (120% Profit) \n\n- **A MVRV of 1.0** means Price is equal to the Realized (Break-Even) \n\n- **A MVRV of 0.8** means Price is 0.8x the Realized Price (-20% Loss)\n\n- **High MVRV Values (\u003e 2.4)** ↗️ indicate the market holds large unrealized profits.\n\n- **Low MVRV Values (\u003c 1.0)** ↘️ indicate the market holds unrealized losses."},"uuid":"b7ce5e80-402b-4c32-924c-27bb01386273","extra":{"backgroundColor":"#ffffff"},"configType":"content"},{"meta":{"content":"## Exploring Extreme Values\n\n---\n\nThe next question is, what classifies as a high, and a low value of MVRV? How can we measure extreme deviations associated with cycle tops and bottoms?\n\nFirst we will start visually, where we have marked out MVRV levels at 0.8 🔵, 1.0 🟢, 2.4 🟠, and 3.2 🔴. These appear, at least initially, to align well with tops and bottoms. However, we will need to make this analysis a little more robust than eyeballing levels in if we want to properly master the MVRV.\n\nA simple approach is to calculate the proportion of days through history where MVRV has traded below, or above these levels. We can calculate and show this using Workbench, and will consider only dates since 2017, aligned with a more mature Bitcoin market. If MVRV has only been below a particular level for 10% of trading days, that means it has been above it for the other 90%, making that scenario more likely."},"uuid":"3452e6db-faa8-4cff-8d86-5edf07f7eaae","extra":{"backgroundColor":"#ffffff"},"configType":"content"},{"meta":{"refUuid":"fbba2da7-668c-49b6-49be-fdf2a7079a78"},"uuid":"b71befce-f045-4a9a-9616-9145984dde52","configType":"workbench"},{"meta":{"content":"## MVRV Pricing Bands\n\n---\n\nNow that we have defined a set of 'extreme levels' for MVRV, we can visualize these as pricing bands. If the MVRV Ratio equals 2.4, that means the corresponding pricing band is 2.4x the Realized Price.\n\nThis tool now allows us to estimate price levels where the market would reach an extreme unrealized profit (high values), or unrealized loss (low values). Reaching these prices may increase the likelihood that investor behavior is triggered (like profit taking, or capitulation), which ultimately is what establishes the cycle top/bottom we are looking for.\n\nNow we can better quantify how likely it is for these MVRV levels to be breached:\n\n- 🔵 **Extreme Lows:** MVRV has been Below 0.8 for around 5% of trading days.\n\n- 🟢 **Getting Low:** MVRV has been Below 1.0 for around 15% of trading days.\n\n- 🟠 **Getting High:** MVRV has been Above 2.4 for around 20% of trading days.\n\n- 🔴 **Extremely High:** MVRV has been Above 2.4 for around 6% of trading days."},"uuid":"84b9fa27-0813-4c56-8f0d-009f46982e23","extra":{"backgroundColor":"#ffffff"},"configType":"content"},{"meta":{"content":"## MVRV Momentum and Cycle Trends\n\n---\n\nThe previous section explored using MVRV to identify cycle extremes. Next we will use MVRV as a tool for identifying macro market trends.\n\nThis chart below shows the MVRV Ratio 🟠 alongside the 1yr simple moving average 🔵. Note how periods where MVRV trades above the 1yr SMA typically describe bull markets, and periods below describe bears. Cycle transition points are often characterized by the MVRV breaking strongly across the 1yr SMA threshold:\n\n- ⬆️ **Strong Breaks Above** 🟩 indicate large volumes of BTC were acquired below the current price, and is now in profit **(describing heavy accumulation near the lows)**.\n\n- ⬇️ **Strong Breaks Below** 🟥 indicate large volumes of BTC were acquired above the current price, and is now in loss **(describing heavy distribution near the top)**."},"uuid":"0528047f-250c-4a84-a0af-31e7d7ea2c9a","extra":{"backgroundColor":"#ffffff"},"configType":"content"},{"meta":{"content":"## MVRV Momentum Oscillator\n\n---\n\nWe can convert this observation into an oscillator by taking the ratio between MVRV, and the 1yr SMA. This tool is particularly useful at spotting these very sharp transitions that occur at cycle turning points.\n\n- 🐻 **Start of the Bear:** Sharp declines (and negative values 🟥) indicate large volumes of supply have been recently transacted at higher prices, and have now fallen into an unrealized loss. This suggests a 'top heavy' market which may be sensitive to price declines.\n\n- 🐂 **Start of the Bull:** Sharp increases (and positive values 🟩) indicate large volumes of supply have been recently transacted at lower prices, and have now returned into an unrealized profit. This suggests a 'bottom heavy' market following heavy capitulation, into accumulation.\n\nKey transition points in past cycles are shown as a gauge for how responsive the MVRV Momentum Oscillator can be to macro cycle changes."},"uuid":"77593a44-051d-4f6d-b67f-dc22a529b4c8","extra":{"backgroundColor":"#ffffff"},"configType":"content"},{"meta":{"content":"## Distribution MVRV Divergences\n\n---\n\nIn this last section, we will explore how the MVRV can be used to provide advanced warning when heavy distribution is taking place, often seen near market cycle tops. This occurs at both macro, and micro scales.\n\nThe chart below shows this phenomena playing out in two metrics:\n\n- **🟩 Realized Profits** which will increase significantly when coins acquired at cheaper prices are transferred to new buyers at more expensive prices.\n\n- **🟠 The Realized Cap** which will experienced a leg higher as a result of this profit taking behavior.\n\n### A View from Each Cycle\n\n**Throughout 2020-23 cycle**, we can clearly see how prices in Oct-Nov 2021 reached a higher ATH compared to Apr, but set a significantly lower MVRV peak.\n\nHow can price be higher, but the aggregate unrealized profit multiple be lower? The answer is that the average coin had higher average acquisition price in November when compared to April. This created a macro scale negative divergence in the MVRV Ratio.\n\nDuring this second July-Nov rally, a large volume of coins which were previously acquired at cheap prices (e.g during the May-July sell-off), took the opportunity for exit liquidity and transferred them to newer, and less experienced 'top buyers'. Coins were revalued from cheap realized prices, and transferred to speculators and price sensitive buyers, who now had a much higher cost basis (closer to the ATH).\n\n**If we zoom into the Jan to May 2021 peak**, we can actually see a similar negative divergence forming in the MVRV Ratio at a smaller scale. Price set sequential new highs, but MVRV was rapidly decaying to lower highs.\n\nThe aggregate profit held within the supply was diminishing, a result of large scale distribution, and profits being converted from unrealized (paper gains), to realized (locked-in).\n\n**We can see a similar event between the double peaks in 2013**, where prices rallied an additional 392%, yet the MVRV ratio was actually lower, falling from 5.74 to 5.43. We can see in green that there was a similar micro scale decay taking place right before the ultimate peak at $1,133.\n\n**This structure was also present within the 2017 late bull cycle**. As MVRV passed above our defined extreme level of 2.4, we started seeing much higher price peaks, but progressively weaker increases in the MVRV Ratio.\n\n\u003e Note that in August 2017, the SegWit upgrade was soft-forked into Bitcoin, and many dormant BTC coins were moved to take advantage of the BCH hard-fork, which will partially influence this cycle observation."},"uuid":"c648cee0-f7cb-4d69-a200-1cbb34067ecd","extra":{"backgroundColor":"#ffffff"},"configType":"content"},{"meta":{"content":"## 2020-23 Cycle Macro Scale\n\n---\n\n![](https://insights.glassnode.com/content/images/size/w1600/2023/02/09_mvrv_macrodeviatioon.png)"},"uuid":"26edde6d-6005-4aa8-82e6-a8576808d920","extra":{"backgroundColor":"#ffffff"},"configType":"content"},{"meta":{"content":"## Jan-May 2021 Cycle Top\n\n---\n\n![](https://insights.glassnode.com/content/images/size/w1600/2023/02/11_mvrv_deviation_2021.png)"},"uuid":"cbbf283b-e08c-4294-983e-ebe47edb5d68","extra":{"backgroundColor":"#ffffff"},"configType":"content"},{"meta":{"content":"## 2013 Cycle Top\n\n---\n\n![](https://insights.glassnode.com/content/images/size/w1600/2023/02/12_mvrv_deviation_2013.png)"},"uuid":"e910c430-9047-430a-bdb6-6410ecdd5215","extra":{"backgroundColor":"#ffffff"},"configType":"content"},{"meta":{"content":"## 2017 Cycle Top\n\n---\n\n![](https://insights.glassnode.com/content/images/size/w1600/2023/02/13_mvrv_deviation_2017.png)"},"uuid":"20e6829a-93b3-4879-8ee5-8aaffdebeedf","extra":{"backgroundColor":"#ffffff"},"configType":"content"},{"meta":{"content":"## Adjusting For Lost Coins\n\n---\n\nOne final thought is that MVRV does carry a net bias to the upside due to the tremendous unrealized profits held by Satoshi, early miners, and lost coins. There are several methods to account for lost coins, but a simple approach is to discount coins that have remained unspent for at least 7yrs.\n\nThe chart below calculates this Adjusted-MVRV, subtracting the unrealized profits held by long dormant coins, all of which last moved at very cheap prices. The result is that we have a higher Adjusted-Realized Price that more accurately reflects the average acquisition price of 'alive supply'. This in turn results in a lower MVRV Ratio (smaller profit multiple), and provides a superior view into the liquid and mobile coin supply."},"uuid":"a4d5ecfd-ab18-4c9c-9430-713f9fe7b953","extra":{"backgroundColor":"#ffffff"},"configType":"content"},{"meta":{"content":"## Correlation Between Price and MVRV\n\n---\n\nGiven that MVRV is a market unrealized profit multiple for unspent coins, and Price is in the numerator, it would be expected that the correlation would high with price itself. This is indeed the case, especially when the denominator, the Realized Cap is relatively stationary.\n\nHowever as this chart shows, both the 30-day 🔴 and 1-yr 🔵 correlation between these metrics breaks down occasionally, usually near cycle tops. This is a result of the aforementioned deviations taking place, as older coins acquired at cheaper realized prices are revalued and distributed.\n\nThis correlation tends to recover near cycle lows, indicative of the coin supply having transferred back to longer-term holders, reducing the influence of the Realized Cap, and putting price back in the correlation drivers seat."},"uuid":"ff34aa2a-a7f5-46eb-89e5-9b731ce33200","extra":{"backgroundColor":"#ffffff"},"configType":"content"},{"meta":{"content":"### Disclaimer\n\n---\n\n*This dashboard and associated content does not provide any investment advice. All data is provided for information purposes only. No investment decision shall be based on the information provided here and you are solely responsible for your own investment decisions. For for details, please refer to our [Terms and Conditions](https://studio.glassnode.com/terms-and-conditions).*"},"uuid":"4840e611-cc77-4a62-941b-1e4e0901a2de","extra":{"backgroundColor":"#ffffff"},"configType":"content"},{"meta":{"refUuid":"57c589d9-2d5d-47b2-5ddf-f07b2dc6f6bf"},"uuid":"49ff9e97-e16b-4b26-9020-f68a7b430bea","configType":"workbench"},{"meta":{"refUuid":"ca1fab62-e6a1-441d-46ef-40841dc0145f"},"uuid":"d2c94228-2d5b-4015-86bd-05127387f5a4","configType":"workbench"},{"meta":{"refUuid":"b1b0a4ec-14a6-4bc2-5eab-e16daf1106af"},"uuid":"b4ca2f2f-28ec-4dad-a114-92a149bfc713","configType":"workbench"},{"meta":{"refUuid":"3e5e3018-e438-42a8-4704-d34201a4dc25"},"uuid":"1a492fe9-1105-4ef9-8802-a7278855f19c","configType":"workbench"},{"meta":{"content":"## Statistical Deviation Bands\n\n---\n\nWe can also calculate a set of statistically significant deviation bands related to the MVRV Ratio. Both the all-time cumulative mean, and the 4yr mean are shown in blue. Upper and lower bands are then computed from these levels representing +/- 1 standard deviation.\n\nThe chart below presents the MVRV Ratio color coded depending on the degree of deviation from the all-time cumulative mean. Upper and lower bands are then computed from these levels representing +/- 0.5 to 1.0 standard deviations.\n\nThe following market cycle phases are presented:\n\n- 🔵 MVRV \u003c -1.0σ\n- 🟢 -1.0σ \u003c MVRV \u003c -0.5σ\n- 🟡 -0.5σ \u003c MVRV \u003c +0.5σ\n- 🟠 +0.5σ \u003c MVRV \u003c +1.0σ\n- 🔴 MVRV \u003e +1.0σ"},"uuid":"2b2df1d4-e2de-4fa4-bdd6-d9b64783f628","extra":{"backgroundColor":"#ffffff"},"configType":"content"},{"meta":{"refUuid":"e65802ad-a43a-4726-72b1-0edf8a45999b"},"uuid":"33d3c7ac-4fc9-4758-83e8-b2bccdb8b32c","extra":{"zoom":"5y"},"configType":"workbench"},{"meta":{"content":"## Statistical Deviation Pricing Bands\n\n---\n\nThis chart presents pricing bands derived from the MVRV Ratio based on the degree of deviation from the all-time mean. Upper and lower bands are computed from levels representing +/- 0.5 to 1.0 standard deviations.\n\nThe following market cycle phases are presented:\n\n- 🔵 -1.0σ\n- 🟢 -0.5σ\n- 🟡 Mean\n- 🟠 +0.5σ\n- 🔴 1.0σ"},"uuid":"92c74f33-d356-4973-8979-303aa19bc397","extra":{"backgroundColor":"#ffffff"},"configType":"content"}],"layouts":[{"h":8,"i":"a1d4da3d-8d7f-43ba-95c0-9ea8c1c61d03","w":8,"x":4,"y":0,"minH":1,"minW":3,"moved":false,"static":false},{"h":8,"i":"84b7ed9f-05bd-4e51-9846-98555ab1f0a9","w":6,"x":0,"y":8,"minH":1,"minW":3,"moved":false,"static":false},{"h":8,"i":"493823e2-a37b-43c0-8c4d-9434be453d73","w":12,"x":0,"y":24,"minH":1,"minW":3,"moved":false,"static":false},{"h":8,"i":"2e5af448-f826-4438-ba85-a0f602000bb1","w":8,"x":4,"y":16,"minH":1,"minW":3,"moved":false,"static":false},{"h":8,"i":"ace27fe1-e123-4874-8e47-42b742104b2f","w":8,"x":4,"y":32,"minH":1,"minW":3,"moved":false,"static":false},{"h":8,"i":"41d814c2-49f2-4964-b930-729520797f8a","w":8,"x":4,"y":40,"minH":1,"minW":3,"moved":false,"static":false},{"h":8,"i":"50189fce-7e62-47be-b297-b47b3dcc7d21","w":8,"x":4,"y":80,"minH":1,"minW":3,"moved":false,"static":false},{"h":8,"i":"dbd5560a-ce74-47c9-9b95-64e0ab21005c","w":8,"x":4,"y":112,"minH":1,"minW":3,"moved":false,"static":false},{"h":8,"i":"b7ce5e80-402b-4c32-924c-27bb01386273","w":4,"x":0,"y":0,"minH":1,"minW":3,"moved":false,"static":false},{"h":8,"i":"3452e6db-faa8-4cff-8d86-5edf07f7eaae","w":4,"x":0,"y":16,"minH":1,"minW":3,"moved":false,"static":false},{"h":8,"i":"b71befce-f045-4a9a-9616-9145984dde52","w":6,"x":6,"y":8,"minH":1,"minW":3,"moved":false,"static":false},{"h":8,"i":"84b9fa27-0813-4c56-8f0d-009f46982e23","w":4,"x":0,"y":32,"minH":1,"minW":3,"moved":false,"static":false},{"h":8,"i":"0528047f-250c-4a84-a0af-31e7d7ea2c9a","w":4,"x":0,"y":64,"minH":1,"minW":3,"moved":false,"static":false},{"h":8,"i":"77593a44-051d-4f6d-b67f-dc22a529b4c8","w":4,"x":0,"y":72,"minH":1,"minW":3,"moved":false,"static":false},{"h":8,"i":"c648cee0-f7cb-4d69-a200-1cbb34067ecd","w":4,"x":0,"y":80,"minH":1,"minW":3,"moved":false,"static":false},{"h":8,"i":"26edde6d-6005-4aa8-82e6-a8576808d920","w":6,"x":0,"y":88,"minH":1,"minW":3,"moved":false,"static":false},{"h":8,"i":"cbbf283b-e08c-4294-983e-ebe47edb5d68","w":6,"x":6,"y":88,"minH":1,"minW":3,"moved":false,"static":false},{"h":8,"i":"e910c430-9047-430a-bdb6-6410ecdd5215","w":6,"x":0,"y":96,"minH":1,"minW":3,"moved":false,"static":false},{"h":8,"i":"20e6829a-93b3-4879-8ee5-8aaffdebeedf","w":6,"x":6,"y":96,"minH":1,"minW":3,"moved":false,"static":false},{"h":8,"i":"a4d5ecfd-ab18-4c9c-9430-713f9fe7b953","w":4,"x":0,"y":104,"minH":1,"minW":3,"moved":false,"static":false},{"h":8,"i":"ff34aa2a-a7f5-46eb-89e5-9b731ce33200","w":4,"x":0,"y":112,"minH":1,"minW":3,"moved":false,"static":false},{"h":4,"i":"4840e611-cc77-4a62-941b-1e4e0901a2de","w":12,"x":0,"y":120,"minH":1,"minW":3,"moved":false,"static":false},{"h":8,"i":"49ff9e97-e16b-4b26-9020-f68a7b430bea","w":8,"x":4,"y":104,"minH":1,"minW":3,"moved":false,"static":false},{"h":8,"i":"d2c94228-2d5b-4015-86bd-05127387f5a4","w":8,"x":4,"y":64,"minH":1,"minW":3,"moved":false,"static":false},{"h":8,"i":"b4ca2f2f-28ec-4dad-a114-92a149bfc713","w":8,"x":4,"y":72,"minH":1,"minW":3,"moved":false,"static":false},{"h":8,"i":"1a492fe9-1105-4ef9-8802-a7278855f19c","w":12,"x":0,"y":48,"minH":1,"minW":3,"moved":false,"static":false},{"h":8,"i":"2b2df1d4-e2de-4fa4-bdd6-d9b64783f628","w":4,"x":0,"y":40,"minH":1,"minW":3,"moved":false,"static":false},{"h":8,"i":"33d3c7ac-4fc9-4758-83e8-b2bccdb8b32c","w":8,"x":4,"y":56,"minH":1,"minW":3,"moved":false,"static":false},{"h":8,"i":"92c74f33-d356-4973-8979-303aa19bc397","w":4,"x":0,"y":56,"minH":1,"minW":3,"moved":false,"static":false}]}}