The MVRV Z-Score is a Bitcoin chart that uses blockchain analysis to identify periods when #Bitcoin is overvalued or undervalued compared to its ‘real value’.

It is a system that uses three indicators:

1. Market Cap (blue line): This is the current price of Bitcoin multiplied by the number of coins in circulation. This is similar to market cap in traditional markets, which is the stock price multiplied by the number of shares.

2. Realized Cap (orange line): The realized cap does not use the current price of Bitcoin, but instead uses the price of the last movement of each Bitcoin, the price when it was last sent from one wallet to another. These prices are added together and averaged, then multiplied by the number of coins in circulation.

By doing this, it removes market sentiment from the market cap indicator

3. Z-Score (red line): The standard deviation test separates outliers between market cap and real value.

Historically, the MVRV Z-Score has been quite effective in identifying periods when market cap exceeds real value. These periods are highlighted by the z-score (red line) entering the pink box, indicating the peak of the market cycle.

In each cycle, the market has been able to reach its peak within two weeks.

Also, when the market value is far below the real value, it is highlighted by the z-score entering the green box.

Buying Bitcoin during these periods has historically yielded great returns.

Let's focus on the chart, we are in the middle area