Realized Cap and MVRV Valuation Metrics

Market cap answers one question: what would it cost to buy every coin in circulation at today's price? It says nothing about what holders actually paid for those coins. A coin trading at $40,000 today, where most holders bought at $60,000, is sitting on aggregate losses; the same price with most holders having bought at $10,000 is sitting on aggregate gains — and those two situations behave very differently under selling pressure. Realized cap and the ratio built from it, MVRV, exist to tell those two situations apart.

Building realized cap

Ordinary market cap is current price times circulating supply. Realized cap instead looks at every unit of the coin, finds the price at which it last moved between wallets (its last on-chain transaction), and sums up (last-moved price × quantity) across every coin in circulation. A coin that hasn't moved in five years is still valued at the price from five years ago, not today's price — realized cap treats it as if the holder's cost basis were frozen at that last transaction.

MVRV: market value to realized value

$$\text{MVRV} = \frac{\text{Market Cap}}{\text{Realized Cap}}$$

In words: divide what the whole supply is worth at today's price by what it was worth when it last actually changed hands. An MVRV above 1 means the average coin, on aggregate, is worth more today than when it last moved — holders are sitting on unrealized profit, on average. Below 1, the reverse: the typical coin is underwater relative to its last transaction price.

Worked example

Suppose a coin's circulating supply is 20 million units, current price is $30,000, so market cap is $600 billion. On-chain data shows the average coin last moved at $22,000, so realized cap is 20 million × $22,000 = $440 billion. MVRV = $600bn / $440bn ≈ 1.36 — holders are, on average, sitting on about a 36% unrealized gain relative to their last on-chain cost basis. Historically, MVRV readings above roughly 3.5 have coincided with prior cycle tops (widespread, extreme unrealized profit, increasing the incentive to sell), while readings below 1 have coincided with prior cycle bottoms (widespread unrealized losses, capitulation exhausted).

What this means in practice

MVRV is a sentiment gauge, not a valuation model with a "correct" level — it tells you how much embedded profit or loss the holder base is carrying, which correlates with selling pressure (profit-takers) or capitulation risk (loss-holders giving up), but it doesn't predict timing precisely and thresholds shift somewhat across market cycles.