Bitcoin Valuation Indicator Signals Undervalue, But Divergence Looms
The MVRV Z-score is a metric used to assess Bitcoin's valuation. It calculates the standard deviation between market value and realized value, which is the average price of each Bitcoin when it last moved on-chain multiplied by the total coins. The MVRV Z-score uses three metrics: Market Value (price times supply), Realized Value (average price at last move times supply), and Z-Score ((MV - RV) / SD). A score above 5 indicates an overbought market, while a score below 0 suggests undervaluation.
On September 3rd, the MVRV Z-score reading was 3.2, indicating Bitcoin is near historical undervaluation. In contrast, during the 2017 and 2021 cycles, the Z-score exceeded 7, signaling extreme overvaluation. Historically, when the Z-score drops below 0, it signals market bottoms.
However, a divergence exists between the MVRV Z-score and the weekly Relative Strength Index (RSI). The RSI entered oversold territory in April 2026, which has not coincided with major bottoms. Global liquidity follows a 65-month cycle, peaking in late 2025, and Bitcoin tends to move in the same direction as global liquidity approximately 83% of the time.