First, looking at the price trend of Bitcoin for more than a decade, the overall trend is on the rise. From the macro-cycle, it can be divided into three bull-bear cycles: in the first cycle, especially before the bull market of 20 1 1 in June, the MVRV was extremely unstable and generally remained between 2 and 8. This is an immature performance of the early bitcoin market. On the one hand, there is a large proportion of speculation in the market. On the other hand, many bitcoins moving on the chain also show great instability, including many bitcoins that may be lost during this period. With the rapid decline in bitcoin prices, MVRV also fell sharply, falling to an all-time low of 0.4. Second, in the second cycle, MVRV rebounded with the price recovery, reaching the first peak at 1.4, but the subsequent price decline made it fall back to the low point of 0.85. After that, it rose to above 5.6, corresponding to the two price peaks before the end of the bull market. The MVRV corresponding to the bear market trough (20 15 to 10) mostly hovers between 0.8 and 0.9. MVRV is less than 1 for a long time, indicating that many long-term holders have fallen into a loss state, corresponding to the reversal period of the market. In the third cycle, with the rise of bitcoin price, there is an extreme situation that MVRV is greater than 4 (the price is seriously overvalued) near the peak of bull market.
3.MV refers to "market value" and RV refers to "actual market value". The difference with the former is that the latter excludes those lost coins and coins that have been stuck for a long time, and calculates the total market value of bitcoin in circulation. MVRV=MV/RV is helpful to know when the transaction price of Bitcoin is lower than the "fair price", and it is also useful to find the bottom and top of the market.
RV has the following advantages:
(1) Reduce the impact of the part (or loss part) that has withdrawn from circulation.
(2) Consider the market value of each coin in the chain.
(3) It can indirectly reflect the chip cost of long-term holders.