Bitcoin Bear Market Nearing End? Stunning MVRV Z-Score Dips Below All Historic Lows

Global cryptocurrency markets witnessed a potentially pivotal development this week as Bitcoin’s key on-chain metric, the MVRV Z-Score, plunged to its lowest recorded levels on a rolling two-year basis. This technical event suggests the premier digital asset may now be more fundamentally undervalued than at the pit of its 2015, 2018, 2020, and 2022 bear market troughs, sparking intense debate among analysts about an imminent phase change.

Understanding the MVRV Z-Score’s Critical Signal

The Market Value to Realized Value (MVRV) Z-Score serves as a sophisticated thermometer for Bitcoin’s network health. Essentially, it compares Bitcoin’s total market capitalization to its realized capitalization—the aggregate price at which each coin last moved on the blockchain. Consequently, this ratio measures the average profit or loss of all coin holders. By dividing this ratio by its standard deviation, analysts create a Z-Score that identifies statistically significant deviations from Bitcoin’s long-term mean value.

Historically, the metric has proven remarkably effective. For instance, extreme highs have coincided with major market tops, while deep lows have signaled major accumulation zones preceding bull runs. The current reading, confirmed by multiple analysts including Michaël van de Poppe and James Easton using Glassnode data, now sits lower than any point in Bitcoin’s last decade. This development provides a quantitative, on-chain foundation for assessing market extremes beyond mere price observation.

Comparative Analysis with Previous Bear Market Bottoms

A detailed examination of historical data reveals the unprecedented nature of the current reading. The following table compares key Z-Score levels at major Bitcoin cycle lows:

This comparative framework highlights a critical pattern. Each time the Z-Score entered its deep ‘undervalued’ zone (typically below zero), it marked a period of exceptional long-term opportunity, though the timing of the recovery onset varied. The current depth suggests a compression of unrealized value across the network that historically precedes mean reversion.

The Macro Context: Precious Metals and Risk Assets

Bitcoin’s technical signal emerges against a complex macroeconomic backdrop. Recently, correlated sell-offs affected both cryptocurrency and traditional risk assets, including a notable downturn in precious metals. Gold and silver experienced sharp corrections, declining approximately 10-15% within a 24-hour window preceding this analysis. Many market observers, including Van de Poppe, interpret this not as a bull market termination but as a necessary consolidation phase.

This parallel movement is significant. Often, Bitcoin decouples from traditional asset correlations at major turning points. The current consolidation in metals could potentially redirect capital flows or investor sentiment toward alternative stores of value, with Bitcoin’s stark undervaluation signal acting as a fundamental catalyst. This interplay between asset classes adds a layer of real-world context to the on-chain data.

Mechanics and Meaning of the “Realized Cap”

To fully grasp the MVRV Z-Score’s message, one must understand its core component: the realized capitalization. Unlike market cap, which simply multiplies price by circulating supply, realized cap aggregates the price at which each Bitcoin last transacted on-chain. Therefore, it represents the total cost basis of the network. When the market cap falls significantly below the realized cap, it indicates the average holder is at a loss—a classic capitulation signal.

Key factors influencing the current low Z-Score include:

• Long-Term Holder Behavior: Persistent accumulation by entities refusing to sell at a loss.
• Supply Shock Dynamics: A decreasing proportion of liquid supply available on exchanges.
• Network Fundamentals: Continued hash rate growth and developer activity despite price pressure.

These on-chain behaviors create a foundation of underlying strength that the price action may not immediately reflect. The widening gap between market sentiment (pessimistic) and network health (robust) is precisely what the Z-Score quantifies.

Expert Interpretation and Market Psychology

Analyst commentary surrounding this event emphasizes caution against mistiming. While the metric suggests profound undervaluation, it does not function as a precise timing tool. Michaël van de Poppe noted the chart looks “wild” and “phenomenal,” stating, “That’s how deep we’re in the bear market, and yes, we’re close to the end of it.” This sentiment echoes a broader analytical view that extremes in on-chain metrics often resolve with dramatic price movements, but the catalyst and timing remain uncertain.

Market psychology plays a crucial role. Periods of maximum undervaluation typically coincide with peak fear, media negativity, and investor exhaustion. The data suggests we may be in such a phase. However, recovery triggers can be unpredictable, ranging from macroeconomic shifts and regulatory clarity to technological breakthroughs or institutional adoption milestones. The Z-Score identifies the condition of the patient; it does not prescribe the medicine or its schedule.

Historical Precedents and the Path Forward

Reviewing previous cycles offers a tempered perspective. After the 2018 bottom, Bitcoin traded sideways for five months before initiating its bull run. The 2020 recovery was V-shaped but occurred amidst unprecedented global monetary stimulus. The 2022 bottom preceded a steady, institutional-led grind higher. Each recovery had a unique character, suggesting that while the Z-Score identifies opportunity, the market’s path to realizing that value is never linear.

Current price action sees Bitcoin testing two-month lows near $81,000, down approximately 2% on the day. This price level, juxtaposed with the extreme Z-Score, creates a compelling dissonance for fundamental analysts. The metric implies that at current prices, the network’s aggregate cost basis is significantly higher, meaning a vast majority of coins are held at a loss—a condition that historically does not persist indefinitely.

Conclusion

Bitcoin’s plunge to a record-low MVRV Z-Score on a two-year rolling basis presents one of the strongest quantitative, on-chain arguments for a profoundly undervalued market state in the asset’s history. This technical milestone, deeper than the lows of 2015, 2018, 2020, and 2022, suggests the underlying network health is disconnected from current price sentiment. While the metric does not guarantee an immediate reversal or predict the exact bottom, it provides a robust, evidence-based framework suggesting the bear market’s final stages may be approaching. Investors and observers should monitor for confirming signals, such as a stabilization in correlated risk assets and a reversal in the Z-Score trend, while acknowledging that historical precedent favors those who recognize such extremes of valuation.

FAQs

Q1: What exactly is the Bitcoin MVRV Z-Score?
The MVRV Z-Score is an on-chain metric that compares Bitcoin’s market capitalization to its realized capitalization (the aggregate price at which each coin last moved), then normalizes this ratio by its standard deviation. It identifies statistically when Bitcoin is extremely overvalued or undervalued relative to its own historical network activity.

Q2: Does a record-low Z-Score mean the price will bounce back immediately?
Not necessarily. While extreme Z-Score readings have historically marked major turning points, they are not precise timing tools. The metric indicates a state of severe undervaluation, but the market can remain in this state for weeks or months before a sustained recovery begins, depending on broader catalysts.

Q3: How does the current Z-Score compare to the November 2022 bear market bottom?
The current reading on a rolling two-year basis is reportedly lower than the level seen in November 2022, which was around the time of the FTX collapse. This suggests the market may be in a more deeply undervalued state now than at that previous cycle low, according to the analysts cited.

Q4: Why are analysts discussing precious metals in relation to Bitcoin’s price?
Bitcoin and precious metals like gold often share investor attention as alternative stores of value. A recent sharp sell-off in gold and silver has led some analysts to speculate that this consolidation could redirect capital or sentiment toward other assets, with Bitcoin’s strong undervaluation signal potentially making it a candidate for renewed interest.

Q5: What should investors look for to confirm a market reversal?
Beyond the Z-Score, confirmation might include a sustained break above key resistance levels (e.g., the 200-day moving average), increasing volume on upward price movements, positive shifts in funding rates for derivatives, and broader improvement in risk asset sentiment. A reversal in the Z-Score’s downward trend itself would also be a key technical confirmation.