The Market-Value-To-Realized-Value (MVRV) ratio is an on-chain metric used in cryptocurrency analysis, comparing an asset’s current market capitalization to its realized capitalization. Realized capitalization values each unit of the asset at the price it last moved on-chain, representing the aggregate cost basis of the market.
Mechanism
The mechanism involves two primary calculations: market capitalization, which is the current asset price multiplied by its circulating supply, and realized capitalization, which sums the value of all coins at the price they were last transacted. The MVRV ratio is then derived by dividing the market capitalization by the realized capitalization.
Methodology
This methodology leverages MVRV to identify periods of potential market overvaluation or undervaluation. A high MVRV ratio suggests that the market price significantly exceeds the collective cost basis of investors, often indicating an overheated market ripe for correction. Conversely, a low MVRV can signal a capitulation phase or a potential buying opportunity, offering a macro perspective on crypto asset pricing cycles.
This event signifies a systemic re-evaluation of digital asset valuations, directly influenced by shifting macroeconomic indicators and their impact on capital allocation strategies.
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