Bitcoin Appears More Undervalued Than in Any Previous Bear Market, On‑Chain Data Shows
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A fresh look at on‑chain metrics suggests that Bitcoin (BTC) is trading at a deeper discount to its historical valuation than during any of the major bear markets of the past decade. The metric in focus, the Market Value‑to‑Realized Value (MVRV) Z‑score, has slumped to record lows on a rolling two‑year basis, according to data from analytics platform Glassnode.
What the MVRV Z‑Score Reveals
The MVRV ratio compares Bitcoin’s total market capitalization with its “realized” capitalization – the value of the supply at the price level where each coin last moved. The Z‑score standardises this ratio by the historical volatility of market cap, producing a single number that classifies the market as over‑valued (positive scores) or under‑valued (negative scores).
- Current reading: The latest Z‑score for Bitcoin is the lowest it has been since October 2023, when the cryptocurrency was priced near $30,000.
- Historical comparison: When examined over a two‑year rolling window, the present score is lower than the bottoms recorded in the 2015, 2018, 2020 (COVID‑induced) and 2022 bear phases.
- Undervalued zone: The last time the live Z‑score entered the “green” undervalued region was at the close of the 2022 bear market, indicating a rare confluence of on‑chain fundamentals.
MVRV analyst James Easton, who tracks the metric on Glassnode, noted the chart’s “wild” descent into historically unprecedented territory. Crypto trader and analyst Michaël van de Poppe echoed the sentiment on X (formerly Twitter), describing the data as “phenomenal” and suggesting that Bitcoin is “close to the end” of its corrective phase.
Recent Price Action Gives Context
Bitcoin’s price has mirrored the on‑chain signal, slipping to a two‑month low of roughly $81,000 after a sharp sell‑off across risk assets and precious metals. The decline came on a day when broader markets lost 10‑15 % in a 24‑hour span, prompting van de Poppe to remark that the recent rally in gold and silver appears “done for now.”
Despite the dip, the analyst cautioned against viewing the move as a sign that the bullish cycle is over. Instead, he posited that a period of consolidation—driven by the current undervaluation—could act as the “trigger” needed for the next upward phase in Bitcoin’s price.
Analytical Perspective
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Depth of the correction: The record‑low Z‑score indicates that a sizable portion of Bitcoin’s supply has not moved for an extended period, reducing the realized value relative to market cap. Historically, such deep discounts have preceded price recoveries as dormant holders re‑enter the market.
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Comparison with past cycles: In each prior bear market, the MVRV Z‑score fell into the undervalued zone before a sustained rally began. The current reading is more extreme than those precedents, suggesting a potentially larger margin for upside.
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Risk considerations: While on‑chain metrics provide valuable insight, they are not deterministic. External factors—such as macro‑economic shifts, regulatory developments, and broader market sentiment—still play a crucial role in shaping Bitcoin’s trajectory.
- Potential catalyst: A sustained period of price stability around the current low could encourage long‑term holders to realise gains, thereby nudging the MVRV ratio upward and possibly igniting a positive feedback loop.
Key Takeaways
- Undervaluation signal: Bitcoin’s two‑year rolling MVRV Z‑score is at its lowest level ever recorded, out‑pacing the lows observed in 2015, 2018, 2020, and 2022 bear markets.
- Historical precedent: Previous instances of similar undervaluation have been followed by significant price rebounds, though timing and magnitude vary.
- Current market backdrop: The cryptocurrency’s price has fallen to just above $81,000 amid a sharp sell‑off in risk assets, reinforcing the on‑chain signal of deep discount.
- Analyst outlook: Market participants such as Michaël van de Poppe view the metric as a sign that the corrective phase may be nearing its end, with consolidation potentially acting as a catalyst for the next rally.
- Caution: On‑chain data should be combined with macro‑economic analysis and risk management; the metric alone does not guarantee future price movements.
The information presented here does not constitute investment advice. Readers should conduct independent research and consider their own risk tolerance before making any trading decisions.
Source: https://cointelegraph.com/news/bitcoin-bear-market-almost-over-btc-price-metric-outpaces-2022-bottom?utm_source=rss_feed&utm_medium=feed&utm_campaign=rss_partner_inbound
