According to Glassnode’s Bitcoin MVRV Z-Score indicator, Bitcoin is about to cross the red zone. The last time BTC saw this trend, it rallied two times more from its current price.
What is the Bitcoin MVRV Z-Score and why is this important?
The Bitcoin MVRV Z-Score indicator is typically used to measure whether an asset is undervalued or overvalued.
When this indicator reaches the top of the red zone shown below, it indicates that the market is likely overvalued.
Currently, the BitcoiN MVRV Z-Score indicator is about to enter the red zone. When it did in previous cycle, BTC rallied more than two-fold thereafter.
Researchers at Glassnode explains:
“The MVRV-Z Score is used to assess when an asset is overvalued or undervalued relative to its “fair value”, as underlined by the deviation between its market cap and realized cap. When market value is significantly higher than realized value, it has historically indicated a market top (red zone), while the opposite has indicated market bottoms (green zone).”