MVRV Z-Score | Vistula Labs

What is MVRV?
MVRV (Market Value to Realized Value) is a fundamental on-chain metric used to assess the relative valuation of cryptocurrencies, particularly Bitcoin and Ethereum. This ratio compares the current market value (market capitalization) to the realized value (an approximation of the average price at which all coins were last moved).

• Market Value: The total market capitalization of the cryptocurrency (current price × circulating supply)
  
• Realized Value: The sum of the market value of all coins valued at the price they last moved on-chain
  

When MVRV is high, it suggests the market may be overvalued relative to the price investors paid for their coins, potentially indicating a market top. Conversely, a low MVRV ratio may signal undervaluation and a potential market bottom.

How MVRV is Calculated for BTC & ETH
The MVRV ratio for both Bitcoin and Ethereum is sourced directly from IntoTheBlock's data feed in this indicator:

• For Bitcoin: INTOTHEBLOCK:BTC_MVRV
  
• For Ethereum: INTOTHEBLOCK:ETH_MVRV
  

This indicator transforms the raw MVRV data into a Z-Score, which measures how many standard deviations the current MVRV value is from its historical mean over a specified period. The Z-Score calculation uses a moving average (customizable between SMA, EMA, DEMA, RMA, WMA, or VWMA) and standard deviation over the specified lookback period.
Z-Score formula: (Current MVRV - Moving Average of MVRV) / Standard Deviation of MVRV

How This Indicator Can Be Used
1. Trend Following
The MVRV Z-Score indicator implements a trend-following system with customizable thresholds:

• Long signals are generated when the Z-Score crosses above the Long Threshold (default: 0.56)
  
• Short signals are generated when the Z-Score crosses below the Short Threshold (default: -0.28)
  

These signals are visually represented by:

• Green up-triangles for long entries
  
• Red down-triangles for short entries
  
• Color-coded candles and Z-Score plot (teal for long positions, magenta for short positions)
  

The trend signals help identify potential momentum shifts in the market based on historical MVRV behavior.

2. Overbought/Oversold Conditions
The indicator identifies extreme market conditions using two additional thresholds:

• Overbought threshold (default: 3.0): When the Z-Score exceeds this value, the market may be significantly overvalued, suggesting potential selling pressure ahead. These zones are highlighted with a light magenta background.
  
• Oversold threshold (default: -2.0): When the Z-Score falls below this value, the market may be significantly undervalued, suggesting potential buying opportunities. These zones are highlighted with a light teal background.
  

These extreme readings have historically coincided with major market tops and bottoms, making them valuable for medium to long-term position management.

Customization Options
The indicator offers several customization options:

• Cryptocurrency source selection (BTC or ETH)
  
• Moving average type and length for the MVRV calculation
  
• Z-Score lookback period
  
• Adjustable thresholds for long/short signals and overbought/oversold conditions
  

These parameters allow traders to fine-tune the indicator to their specific trading strategy and risk tolerance.

Alerts
The indicator includes four alert conditions:

• MVRV Long Opportunity
  
• MVRV Short Opportunity
  
• MVRV Overbought Condition
  
• MVRV Oversold Condition
  

These alerts can help traders stay informed of potential trading opportunities without constant chart monitoring.