A Reading Not Seen Since 2023
Cryptoquant analysts noted that bitcoin’s MVRV ratio has dropped to about 1.1, sitting just above the green undervaluation band that has historically marked major market bottoms. MVRV measures the ratio between bitcoin’s market value and its realized value or roughly, the price paid for all coins the last time they moved.
A reading below 1 means the average holder is underwater, a condition that tends to appear only during deep capitulation. At 1.1, bitcoin is brushing that threshold for the first time since March 2023, when prices hovered near the $20,000 mark.
Past episodes of depressed MVRV readings have often preceded strong recoveries. For instance, after the market stress that followed the collapse of FTX in late 2022, bitcoin entered a similar valuation zone and then rallied roughly 67% over the next three months.
That said, some markers look even more extreme than the one above, as the MVRV Z-score (a related gauge that adjusts for volatility) fell toward levels lower than those seen at previous bottoms in 2015, 2018, 2020, and 2022. Together, the readings suggest valuations are unusually compressed (at least in relation to past cycles).
The signal lands as bitcoin has clawed back from lows of $59,000 before rebounding toward $64,000, albeit briefly. Moreover, Bitcoin.com News reported last week that more than half of all BTC in existence slipped into unrealized loss at its recent low, a condition that has accompanied every major bear-market bottom in bitcoin’s history.
A Cycle That Looks Different
In a pertinent caveat, Cryptoquant analysts have cautioned that the current decline does not mirror past cycles cleanly because, unlike previous downturns, bitcoin did not first surge into a deeply overvalued zone before falling (meaning the usual round trip from euphoria to despair has not played out the same way).
That distinction matters for anyone treating MVRV as a timing tool since a low reading reflects compressed valuations, but it does not guarantee an immediate reversal. In other words, prices can stay cheap, or grow cheaper, if selling pressure persists. Analysts have separately warned of ongoing distribution pressure from medium-term holders, a dynamic that could complicate any recovery.
Valuation models like MVRV are best read as context rather than triggers. They tell investors when risk and reward have historically tilted in buyers’ favor, not when the bottom will arrive.
Looking ahead, the cheap-zone reading adds to a growing list of bottoming signals (from oversold momentum gauges to more than half of BTC’s supply underwater) that have accumulated during bitcoin’s slide. Whether they mark a durable floor will depend on the macro and geopolitical forces that drove the sell-off, including U.S. rate expectations and Middle East tensions.
