1/5 The Market-Value-to-Realized-Value (MVRV) Bands are a new valuation model that iterates upon one of the most popular on-chain metrics in #Bitcoin
Learn how it works by checking out the short 🧵 below or reading the full article at @BitcoinMagazine : bitcoinmagazine.com/markets/market…
Learn how it works by checking out the short 🧵 below or reading the full article at @BitcoinMagazine : bitcoinmagazine.com/markets/market…
2/5 The first concept to grasp is that of Realized Value (RV), introduced by @nic__carter & @khannib in 2018
RV is the total value of all circulating coins at the last time they moved on-chain, therefore representing the estimated cost-base of all existing #bitcoin
RV is the total value of all circulating coins at the last time they moved on-chain, therefore representing the estimated cost-base of all existing #bitcoin
3/5 Briefly after, @kenoshaking & @MustStopMurad divided the total #bitcoin Market Value (MV) by the RV, creating a groundbreaking metric called the MVRV Ratio
A pseudonym called Awe and Wonder then iterated upon it by standardizing it ((MV-RV)/MVsd), creating the MVRV Z-Score
A pseudonym called Awe and Wonder then iterated upon it by standardizing it ((MV-RV)/MVsd), creating the MVRV Z-Score
4/5 Using the same method used to create the #Bitcoin Price Temperature (BPT) Bands before, the MVRV Z-Score can be mapped upon the #bitcoin price chart by calculating the RV+x*MVsd at every point in time, where x represents the z-score that you want to visualize
5/5 To summarize; the MVRV Bands represent the #bitcoin price at a certain number of standard deviations from its estimated cost basis
Due to the use of a standard deviation, the bands curl up during 🐂 runs, adopting more lenient price estimations during more volatile times
Due to the use of a standard deviation, the bands curl up during 🐂 runs, adopting more lenient price estimations during more volatile times
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