📊 Analyzing Bitcoin's MVRV Peaks with Z-Score 📊
As Bitcoin matures, its MVRV (Market Value to Realized Value) peaks are getting smaller 🔍. To better understand this trend, we use the Z-Score tool, which helps normalize these changing patterns 📈.
🔍 Z-Score Formula:
1. Subtract the average from the current value ➖
2. Divide by the standard deviation ➗
3. The result shows how far from normal the current value is 📊
🚨 The Catch:
Using all of Bitcoin's historical data can be misleading 🚫. Early cycles had much higher peaks, skewing calculations and making it harder to understand current market conditions accurately 🔍.
📊 Solution:
Many analysts prefer using shorter time windows (e.g., 1-3 years) for Z-Score calculations 🕒. This approach provides a more relevant picture of current market behavior, helping you make more informed decisions 📊.
👍 Key Takeaway:
When analyzing Bitcoin's MVRV peaks, consider using shorter time windows for Z-Score calculations to get a more accurate picture of current market conditions 🔍.
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