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Calculating MVRV Z-score Of Bitcoin

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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.
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