LEARN MARKET VALUE / REALIZED VALUE（MVRV） INDEX IN 3 MINUTES ——BLOCKCHAIN 101

Chasing Tops and Panic Selling: The Default Behavior of Most Traders.Many participants in the market are fully aware of their own tendency to chase tops and sell bottoms before they start trading. Yet once they’re in, they unconsciously fall into that very pattern.

To break out of the habit of “buying when it’s rising, selling when it’s falling,” you need an indicator that reflects not just the current price, but also the cost basis of holders—that’s where today’s star indicator comes in: MVRV (Market Value / Realized Value).

This article continues our Crypto-Specific Technical Indicator Series, taking you from zero to mastery on MVRV, and helping you develop a new perspective on on-chain valuation.

Why Should You Care About MVRV?

Imagine you bought 1 BTC. Then:

If the price rises to $100,000, you’re theoretically in profit;
If the price drops to $80,000, you’re at a paper loss;

But does this mean the market is overvalued or undervalued?

Judging by the current price alone is not enough, because it ignores the average cost of all other holders. Some bought the dip, others bought the top.

When the overall cost basis is much lower than the current price, it often leads to massive profit-taking.

On the flip side, when the average cost is above the current price, it could mean a bottoming opportunity.

MVRV compares Market Value and Realized Value, and tells us：Is the market overbought or oversold?

MVRV > 1: Most holders are in profit → possible local top.
MVRV < 1: Most holders are at a loss → possible bottom-buy opportunity.

Breaking Down MVRV’s Two Core Components: MV and RV

1. Market Value (MV)

Simple & intuitive: Circulating supply × current market price
Reflects: The current market cap if all tokens were priced at spot value
Pros: Real-time, easy to calculate
Cons: Only reflects price, ignores holder cost basis

2. Realized Value (RV)

Slightly more abstract: Sums the price of each coin at its last on-chain movement
Meaning:
- If you bought 1 BTC at $80,000, RV records it as $80,000
- If someone else later buys at $70,000, that coin is counted as $70,000 in RV
Reflects: A network-wide cost basis of holders’ last on-chain activity
Pros: Represents actual holder cost, resistant to short-term noise
Cons: Computationally intensive, requires deep on-chain data

So What’s the Use of MVRV = MV ÷ RV?

1. Valuation Signal

MVRV ≥ 1.5–2.0: Most holders are in profit → beware of incoming profit-taking or volatility
MVRV ≤ 0.8–0.7: Most holders are underwater → may signal deep value / bottoming zones

2. Aiding Investment Decisions

Bull Top Warning: If price hits new highs and MVRV also reaches a historical peak, beware of a possible local top
Bear Market Bottoms: If price makes new lows and MVRV drops below historical norms, it may be time to start accumulating

3. Works Well With Other Indicators

Combine MVRV with:

NUPL (Net Unrealized Profit/Loss)
SOPR (Spent Output Profit Ratio)
Volume / capital inflow/outflow metrics

Examples:

MVRV < 1 and SOPR < 1 → Strong bottoming signals, especially if coupled with volume surges
MVRV > 1.8 and NUPL > 0.6 → High probability of correction

Common Misunderstandings & FAQs

Misconception 1: MVRV is low = Must buy?

Truth: A low MVRV suggests opportunity, but in highly bearish macro conditions, with harsh regulation or large token unlocks, further sell-offs can still happen.
Tip: Confirm with other signals—news, whale transfers, DeFi liquidity shifts, etc.—to gauge whether panic is overdone.

Misconception 2: MVRV is high = Must sell?

Truth: While short-term downside risk rises, if the project continues innovating, big institutions are accumulating, or major listings are on the horizon, price can still go higher.
Tip: Watch key events—unlock dates, protocol upgrades, fund flows—to assess whether high MVRV is a real top or just short-term noise.

Misconception 3: MVRV works on any token?

Truth: It’s reliable for major coins (BTC, ETH, SOL) with rich on-chain activity and history.
But: For small caps or newly launched tokens, limited data can easily distort MVRV.
Tip: Use cautiously on niche or new coins. Practice MVRV analysis on large-cap assets first.

Conclusion

In crypto markets, traders often fall into emotional traps:chasing green candles, selling red ones—eventually losing to themselves.The core value of the MVRV ratio is that it gives you a cost-based reference point for the market, so you understand:

When everyone is “flooring the gas,” maybe you should brake;
When everyone’s “ditching the car,” maybe it’s your entry point.

Make MVRV part of your daily analysis toolkit.It’ll help you take a macro on-chain view of valuations—so you won’t blindly follow the crowd or panic sell.
Instead, you’ll hold your ground in the ever-rotating cycle of bull and bear markets.