MVRV Z-Score is a metric that shows whether the market is overvalued or undervalued. In short, this metric is based on standard deviation, producing more accurate results.
When we look at the historical data, Bitcoin bought at levels around -0.5 has yielded very high returns. The peak level of the metric has been determined as 0.8. When we add the 365-day SMA indicator to the metric, it acts as support and resistance.
There are two critical levels to consider here. The metric fell below the 0 level and tested the 365-day SMA, finding support. This showed that the metric had cooled down and acted as support, signaling a possible bottom and continuation for the next move.
I think it will continue until it reaches the overbought region, reaching the cyclical peak level in the red zone. We're only halfway there.
Written by XBTManager
