This Single Metric Points to More Upside Ahead for Bitcoin

Bitcoin Hits Record Highs, But On-Chain Signals Suggest Further Upside Ahead

Bitcoin (BTC) reached a new all-time high above $112,000 on Wednesday, continuing a steady uptrend driven by rising corporate adoption and increasing institutional interest. Yet, while the price has scaled new peaks, on-chain analysis indicates that bitcoin’s rally may not be over yet.

One of the main metrics supporting this view is the MVRV Z-Score, a widely followed indicator used to assess whether bitcoin is overvalued or undervalued compared to its historical norms.

What Is the MVRV Z-Score?

The MVRV Z-Score compares bitcoin’s market value—the total network value calculated as the current price multiplied by the circulating supply—to its realized value, which reflects the price at which each bitcoin last moved on-chain.

When market value significantly exceeds realized value, the asset is often considered overheated and near a potential market top, reflected in the so-called “red zone.” Conversely, when market value is below realized value, it tends to signal undervaluation and potential market bottoms in the “green zone.”

The metric is calculated using the formula: MVRV Z-Score=Market Cap−Realized CapStandard Deviation of Market Cap\text{MVRV Z-Score} = \frac{\text{Market Cap} – \text{Realized Cap}}{\text{Standard Deviation of Market Cap}}MVRV Z-Score=Standard Deviation of Market CapMarket Cap−Realized Cap

By incorporating standard deviation, the Z-Score adjusts for historical volatility and places current valuations into longer-term context.

Room for Further Growth

Currently, the MVRV Z-Score stands at 2.4, which remains well below the levels typically seen during bitcoin’s major market tops. For comparison, past bear market lows have often recorded scores below zero (such as in 2015, 2019, and 2022), while peaks in 2017 and 2021 saw scores exceeding 7, according to data from Glassnode.

Although the MVRV Z-Score is just one part of the broader market picture, its current reading suggests bitcoin’s price could still have significant room to climb before approaching historically overheated territory.