MVRV Z-Score: Learn What Bitcoins Are Worth Relative to Their Fair Value

When people talk about Bitcoin, one of the things they most frequently discuss is, "What are bitcoins worth?" Since Bitcoin's value is mostly determined by supply and demand, there's no easy answer to this question. To find a Bitcoin's fair value, you have to carefully consider several factors. An MVRV Z-score can make all these calculations a little simpler. How do MVRV Z-scores work? Explore our guide to learn what an MVRV Z-score is, and how you can use it to assess Bitcoin’s value.

What Is MVRV Z-Score?

MVRV Z-score is a helpful metric that provides insight into the value of any cryptocurrency but is more typically used for Bitcoin. MVRV stands for "market value to realized value," and it shows whether the cryptocurrency is overvalued or undervalued at the moment.

This metric has its roots in the MVRV ratio, which Murad Mahmudov and David Puell created in 2018. The original MVRV ratio simply compared the market value and realized value for Bitcoin. It was a great way of following spur-of-the-moment price trends, but it didn't provide much insight into Bitcoin's fair value.

The MVRV Z-score is a modification of Mahmudov and Puell's original metric. First generated by Awe & Wonder in late 2018, the MVRV Z-score metric adds the mathematical concept of Z-scores to the MVRV metric. A Z-score typically measures the number of standard deviations that go above or below the mean value. However, an MVRV Z-score substitutes the realized value of Bitcoin for the mean value.