The MVRV Z-Score compares the current market value of Bitcoin (black line) to its realized value. The Z-score (orange line) measures the standard deviation between these two values, highlighting extreme overvaluation or undervaluation.

When Bitcoin’s Market Price is above the Realized Price, market participants are in profit. When the Market Price is below the Realized Price, participants are in paper loss. This provides a long-term view of Bitcoin’s market sentiment, offering a key indicator of potential market bottoms when the price falls below the Realized Price.

The Stock-to-Flow model treats Bitcoin similarly to scarce commodities like gold or silver, using the ratio of Bitcoin in circulation (stock) to the amount of new Bitcoin mined each year (flow). This model suggests that Bitcoin’s price will increase as its supply becomes more limited over time, particularly after halving events, when mining rewards are reduced. By analyzing this ratio, Bitcoin investors and traders can make informed predictions about future price movements.