The MVRV Z-Score is a metric used to assess the current market value of an asset relative to its historical realized value. It's calculated by taking the difference between the market value (price) and the mean realized value, and then dividing by the standard deviation of the realized value. A positive Z-Score indicates that the market value is higher than the historical average, suggesting the asset may be overvalued. Conversely, a negative Z-Score suggests undervaluation.
The formula for MVRV is:
MVRV = (Market Value) / (Realized Value)
The MVRV Z-Score formula is:
(SHIB market value - SHIB realized value) / market value standard deviation = MVRV z-score
In this chart, the blue line represents the weekly closing price of SHIB in USD, while the red line represents the MVRV Z-Score. The MVRV Z-Score can provide insights into whether SHIB is currently overvalued or undervalued relative to its historical average.