Bitcoin Is Now Undervalued, Suggests This Price Metric

Bitcoin's MVRV Z-score suggests the cryptocurrency is under-priced and could be trading near a major bottom.

AccessTimeIconMar 17, 2020 at 11:45 a.m. UTC
Updated Sep 14, 2021 at 8:19 a.m. UTC


  • Bitcoin's MVRV Z-score suggests the cryptocurrency is underpriced and could be trading near a major bottom.
  • Short-term technical charts indicate scope for a test of price resistance near $5,900.
  • A violation of an ascending trendline support on the four-hour chart would expose the recent low below $4,000.

A key metric suggests bitcoin (BTC) is now trading at a relatively discounted price, having dropped by 60 percent in the last three weeks.

Bitcoin’s market value to realized value (MVRV) Z-score fell below zero on Friday and stood at -0.18 as of Monday, according to crypto analytics firm Glassnode. The metric is used to to identify periods where the cryptocurrency is under- or overvalued


The Z-score has turned negative for the first time in 12 months, suggesting the cryptocurrency is now undervalued.

Bitcoin topped out at $10,500 in mid-February and fell to a 12-month low of $3,867 on March 13, according to CoinDesk's Bitcoin Price Index.

The cryptocurrency suffered a staggering 39 percent drop Thursday as the coronavirus-led sell-off in the global stock markets triggered margin calls and forced investors to liquidate their positions in bitcoin and other markets including gold and U.S. Treasurys.

Calculating MVRV Z-score

Bitcoin’s market value refers to the total dollar value of the supply in circulation, as calculated by the daily average price across major exchanges.

Meanwhile, the realized value approximates the value paid for all coins in existence by adding the market value of coins at the time they last moved on the blockchain.

The latter is closer to fair value as it adjusts for lost coins and those being held for the long term (so-called HODLing). As such, the MVRV Z-score essentially represents the distance or deviation from the realized value.

Bottoming out?


Historically, a below-zero MVRV Z-score (green area) has marked market bottoms, while a reading above 7 has marked tops.

For example, bitcoin fell below $6,000 on Nov. 14, signaling an extension of the sell-off from the record high of $20,000 reached in December 2017. It had dropped to $3,400 by Nov. 25.

The Z-score also turned negative in the second half of November and declined to -0.51 by mid-December. The sell-off ran out of steam near $3,100 in December and, after some consolidation, broke into a bull market in April.

Essentially, the ebbing of downside momentum was reflected in the Z-score’s negative turn.

Going back further, the 2014 bear market, which began at highs above $1,000 at the end of 2013, ran out of steam near $150 in January 2015 with the Z-score falling to -0.50. Again, after consolidating for some months, the cryptocurrency broke into a bull market in November 2015.

So if history is a guide, the current MVRV Z-score of -0.18 suggests the cryptocurrency could be trading near a bottom.

At press time, bitcoin is trading in the green near $5,335, representing a near 18 percent gain over 24 hours.

Equity futures rebound

The recovery may be associated with the positive action in the U.S. stock futures and the Asian and European equity markets. Notably, futures on the S&P 500, Wall Street’s equity index and the benchmark for global equities, rose nearly 5 percent early Tuesday, triggering a “limit up”.

Bitcoin has recently been tracking action in the equity markets and could continue to do so in the short term. From a technical perspective, though, there is scope for an extension of the ongoing recovery rally.

Daily chart

Bitcoin created a hammer candle on Monday, validating oversold conditions suggested by the 14-day relative strength index. A hammer comprises a long lower wick with a small body, and occurs when the sellers fail to keep prices at the lowest point of the day. Essentially, it represents seller exhaustion.

As a result, a move to the $5,900–$6,000 range may be seen in the next 24 hours or so. That range has recently capped upside in the cryptocurrency.

4-hour chart

Buyers need to prevent a break below the ascending trendline support, currently at $4,672, which would negate a bullish higher low at $4,435 that formed Monday.

A violation there would shift risk in favor of a drop to $4,000. The chart shows the area above $5,900 has proved a tough nut to crack for the bulls over the last four days. As a result, a sustained move above that level is needed to invite stronger buying pressure.

Disclosure: The author holds no cryptocurrency at the time of writing.


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