Bitcoin Sets New Record, But Key Metric Suggests the Rally May Still Have Legs
Bitcoin (BTC) has surged to a fresh all-time high above $112,000, driven by growing corporate adoption and institutional interest. Yet despite reaching record levels, on-chain data signals that the current rally might not be running out of steam just yet.
A central indicator behind this outlook is the MVRV Z-Score, a metric analysts use to judge whether bitcoin is trading above or below its fair value compared to historical trends.
Decoding the MVRV Z-Score
The MVRV Z-Score measures the difference between bitcoin’s market value—the total network capitalization calculated from current prices and circulating supply—and its realized value, which reflects the price at which coins last moved on-chain.
When bitcoin’s market value soars far above its realized value, it often signals the market is overheated and nearing a potential top—the so-called “red zone.” Conversely, when market value is lower than realized value, bitcoin is seen as undervalued, pointing to potential market bottoms in the “green zone.”
The calculation for the metric is: MVRV Z-Score=Market Cap−Realized CapStandard Deviation of Market Cap\text{MVRV Z-Score} = \frac{\text{Market Cap} – \text{Realized Cap}}{\text{Standard Deviation of Market Cap}}MVRV Z-Score=Standard Deviation of Market CapMarket Cap−Realized Cap
This formula places current valuations into historical context by adjusting for long-term price volatility.
Why This Rally May Not Be Over
As of now, the MVRV Z-Score sits at 2.4, a level well below the thresholds typically reached during bitcoin’s historic peaks. For perspective, bitcoin’s major bear market bottoms have often registered scores below zero—as seen in 2015, 2019, and 2022—while the blow-off tops of 2017 and 2021 saw scores exceed 7, according to data from Glassnode.
While the MVRV Z-Score is only one piece of the broader market puzzle, its current reading suggests that bitcoin could still have significant room to climb before approaching historically overvalued territory.
