Bitcoin (BTC) is approaching “undervalued” territory for the first time in three years as the classic indicator approaches an inflection point.
Key Points:
-
Research shows that as of March 2023, Bitcoin has not been that “undervalued” compared to its market capitalization.
-
The MVRV indicator is approaching the key break-even point for the first time in over three years.
-
MVRV analysis sees Bitcoin in the process of reversing its downward trend.
Bitcoin’s value index reflects the price of $20,000
Research from the onchain analytical platform CryptoQuant published on Friday reveals key changes in Bitcoin’s market value to realized value (MVRV) ratio.
A classic BTC price indicator, the MVRV ratio, compares Bitcoin’s market capitalization to the price at which supply has recently moved, also known as the “realized cap.”
Values below 1 mean that supply is understated at current prices. Last week, as BTC/USD fell below $60,000, MVRV hit 1.13 – its lowest reading since March 2023, when it was trading at just $20,000.
“After reaching an all-time high in October 2025, Bitcoin has been in a downtrend for about four months and is now approaching a zone that could be considered undervalued,” commented Crypto Dan, co-author of CryptoQuant.
“Generally speaking, when the MVRV ratio falls below 1, Bitcoin is considered undervalued. Currently, the ratio is around 1.1, which suggests that the price level is approaching the undervalued range.”
The last time MVRV registered below 1 was in early 2023. At Bitcoin’s last all-time high in October last year, the indicator peaked at 2.28.
Crypto Dan questioned the validity of Bitcoin’s 52% decline from record highs. He argued that neither top nor bottom are characteristic of typical MVRV behavior.
“However, unlike previous cycles, Bitcoin did not experience a surge into a clearly overvalued zone during the last bull cycle,” the research post continued.
“It is worth recognizing this distinction. As a result, the current decline may also be different from past market lows, and it seems necessary to respond with this possibility in mind.”
Bitcoin price bottom ‘right now is rigged’
In January, Cointelegraph reported early signs that BTC price action may be preparing for a trend reversal.
Related: Binance Teases Bitcoin ‘Rally’ as Cryptocurrency Market Sentiment Hits Record Low
On two-year time frames, the MVRV Z-score, which divides its readings by the standard deviation of market capitalization, has recently fallen to historically low levels.
“The current Z-score for $BTC is lower than during the bear markets of 2015, 2018, the Covid-19 crash of 2020 and 2022,” cryptocurrency trader, analyst and entrepreneur Michaël van de Poppe noted at the time.
This week, CryptoQuant provider GugaOnChain used another iteration of the Z-score to show that BTC/USD was in the “surrender zone.”
“The indicator suggests we are approaching a historic accumulation phase,” he wrote in an accompanying post.
“The statistical deviation in the Z-Score creates an opportunity and signals that the bottom of a downtrend is forming.”
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision. While we strive to provide exact and up-to-date information, Cointelegraph does not guarantee the accuracy, completeness or reliability of any information contained in this article. This article may contain forward-looking statements that involve risks and uncertainties. Cointelegraph is not liable for any loss or damage arising from your reliance on this information.
