Bitcoin at an all-time low: the MVRV metric signals an extreme undervaluation zone
The first cryptocurrency market is once again capturing analysts' attention. According to data from the key on-chain indicator MVRV, Bitcoin has entered a zone of historical extreme undervaluation. The current metric value is in the bottom 5% of all recorded readings. This means that in 95% of cases throughout the asset's history, its valuation was higher than it is now.
What MVRV shows and why it matters
MVRV (Market Value to Realized Value) compares Bitcoin's current market capitalization with the capitalization calculated based on the price of each coin's last movement. In simple terms, it shows how much the current price deviates from the average purchase price of all coins in circulation. When the market price significantly exceeds the average purchase price, the asset is considered overheated. Conversely, when the price approaches or falls below the average purchase price, the asset enters an undervaluation zone.
Currently, the average investor who bought Bitcoin has minimal profit relative to their entry price. Moreover, a significant portion of the market is at a loss. Historically, such a situation has preceded the formation of long-term price bottoms.
Additional signals: MVRV Z-Score and holder behavior
The picture is complemented by another variation of the metric — the MVRV Z-Score. This indicator, which accounts for deviation from the long-term trend, is currently at its multi-year support line. Analysis shows that for 99.71% of Bitcoin's entire history, the daily closing price was above this trend line. A drop below it is an extremely rare event. The current position of the price near this boundary suggests that, according to the logic of this metric, the room for further decline is virtually exhausted.
At the same time, we are witnessing a record concentration of supply in the hands of long-term holders (Long-Term Holders). They now control 84% of all coins in circulation. This is a powerful signal: the more coins are "frozen" in the hands of patient investors, the less selling pressure there is on the market. Such a balance of forces is typically interpreted as a sign of low willingness to sell and high confidence in the future of the asset.
The quantum factor and the overall picture
Notably, all of this is occurring against the backdrop of a historic rise in Bitcoin's quantum discount factor to 30%. This metric reflects the undervaluation of the asset due to risks associated with the development of quantum computing. The emergence of such a factor of uncertainty adds complexity to an already intricate picture.
My analysis: We are witnessing a rare combination of fundamental signals. Extreme undervaluation according to MVRV, positioning at the multi-year support line according to the Z-Score, and a record share of "strong hands" — all of this indicates that current levels are historically attractive for entry. However, this should not be perceived as a guarantee of an immediate reversal. Quantum risk and overall macroeconomic uncertainty could prolong the consolidation period. Nevertheless, for a long-term investor, the current metric values are arguably one of the most compelling signals for accumulation in recent years.