Bitcoin MVRV Ratio Momentum

Bitcoin MVRV Ratio with 365 Day SMA

The Market Value to Realized Value (MVRV) ratio is one of Bitcoin's most powerful on-chain metrics for identifying market cycle extremes and potential reversals. This indicator plots the MVRV ratio alongside its 365-day moving average to help identify market trends and sentiment shifts.
What is MVRV?
MVRV Ratio = Market Cap / Realized Cap

Market Cap: Current price × circulating supply (what the market values Bitcoin at today)
Realized Cap: Sum of all coins valued at the price they last moved on-chain (the aggregate cost basis of all holders)

The MVRV ratio essentially measures whether Bitcoin holders are, on average, in profit or loss, and by how much.
Key Components:

MVRV Ratio - Orange Line

Shows the current Market Value to Realized Value ratio
Values above 1.0 indicate holders are in profit on average
Values below 1.0 indicate holders are in loss on average
More volatile, responds quickly to price changes


365 Day SMA - White Dashed Line

Smooths out short-term volatility
Shows the trend direction of market sentiment
Acts as dynamic support/resistance


Fill Shading Between Lines

Green fill: MVRV is above its 365-day average (bullish momentum)
Red fill: MVRV is below its 365-day average (bearish momentum)
Helps quickly visualize trend strength and momentum shifts



Reference Levels:

1.0 (Gray Dashed): Market Cap = Realized Cap

Holders break even on average
Historically strong support during bear markets
Breaking below suggests capitulation territory


3.7 (Red Dotted): Historical Top Zone

Area where previous cycle tops occurred
Suggests market overheating
Not a precise sell signal, but indicates elevated risk


0.8 (Green Dotted): Historical Bottom Zone

Area where previous cycle bottoms formed
Suggests extreme undervaluation
Historically excellent long-term accumulation zone



Background Shading:

Light Red Background: MVRV > 3.5

Extreme overvaluation zone
Historically near cycle peaks
Consider taking profits or reducing exposure


Light Green Background: MVRV < 1.0

Undervaluation zone
Holders are underwater on average
Historically strong accumulation opportunities



How to Interpret:
Bullish Signals:

MVRV crosses above its 365-day SMA (green fill appears)
MVRV bounces from the 1.0 level
MVRV enters the <1.0 zone (long-term buying opportunity)
Rising 365-day SMA suggests improving market health

Bearish Signals:

MVRV crosses below its 365-day SMA (red fill appears)
MVRV reaches 3.5+ levels (overheated)
Declining 365-day SMA suggests deteriorating market health
MVRV peaks and begins declining from extreme levels

Trend Confirmation:

Extended green fill periods = bull market
Extended red fill periods = bear market
Multiple touches of the 365-day SMA = consolidation/ranging market

Historical Performance:
Looking at past cycles:

2013-2015: MVRV peaked near 6.0, bottomed around 0.8
2017-2018: MVRV peaked near 4.5, bottomed around 0.9
2021-2022: MVRV peaked near 3.7, bottomed around 1.0
Each cycle shows declining peak MVRV ratios (maturing market)
The 365-day SMA has consistently marked trend transitions

Best Practices:
For Long-Term Investors:

Accumulate when MVRV < 1.0 and in green background zone
Be cautious when MVRV > 3.5 with red background
Use 365-day SMA as a macro trend filter
Don't expect perfect timing; these are probabilistic zones

For Active Traders:

Trade crossovers of MVRV and its 365-day SMA
Use the fill color changes as momentum indicators
Combine with price action and other technical indicators
Consider reducing position size as MVRV approaches 3.5+

Risk Management:

MVRV is a lagging indicator; it confirms trends rather than predicts them
Extreme readings can persist longer than expected
Past cycle tops/bottoms are not guaranteed to repeat
Always use proper position sizing and stop losses

Why This Metric Matters:
Unlike pure price-based indicators, MVRV incorporates fundamental on-chain data about holder behavior. It answers the question: "How much profit/loss are Bitcoin holders sitting on?" This makes it particularly useful for:

Identifying when market euphoria reaches unsustainable levels
Spotting capitulation events when holders panic sell at losses
Understanding the psychology driving current price action
Filtering out noise to focus on macro trend shifts

The 365-day moving average addition helps smooth volatility and identify sustained trend changes, making the indicator more actionable for both investors and traders.
Technical Notes:

Uses real on-chain data from CoinMetrics (Realized Cap) and Glassnode (Supply)
Calculations performed on daily timeframe data
Works best on daily, weekly, and monthly chart timeframes
Data availability starts from early Bitcoin history (2010+)


Disclaimer: This indicator is for educational and informational purposes only. Past performance does not guarantee future results. Always conduct your own research and consider your risk tolerance before making investment decisions.