On-chain valuation starts with a simple reframing: instead of valuing every coin at the current price, value each at the price it last moved. That is realized cap, and the ratio it produces — MVRV — is one of the more durable cycle gauges in crypto.

Realized cap, defined

Market cap values all coins at spot. Realized cap values each coin at the price when it last transacted on-chain, then sums them. It is effectively the aggregate cost basis of the network — what holders, on average, actually paid.

This strips out the distortion of dormant supply being marked at today's price and gives a measure rooted in what the market has genuinely committed.

MVRV: the ratio that matters

MVRV is market value divided by realized value — spot market cap over realized cap. It tells you how far price sits above or below the network's aggregate cost basis:

  • MVRV well above 1 — holders sit on large unrealized profit. Historically associated with cycle tops and distribution pressure.
  • MVRV near or below 1 — price is at or under aggregate cost basis. Historically associated with capitulation and accumulation zones.

Variants like MVRV-Z score normalize the reading to flag statistical extremes more cleanly.

How to use it

MVRV is a slow, structural gauge, not a timing tool. Extremes have marked major turning points across cycles, but it can stay stretched for a long time, and "overvalued" is not a sell signal on its own. Read it as terrain — where in the profit-and-loss landscape the average holder sits — and pair it with flow and supply data for confirmation.

A useful companion split is short-term-holder versus long-term-holder MVRV. When short-term holders are deep underwater (their MVRV below 1) while long-term holders keep accumulating, you are usually nearer a bottom than a top.

Where it misleads

Three caveats. Lost coins inflate the picture — coins whose keys are gone still count at an ancient cost basis. Exchange and custody movements can re-stamp cost basis without real economic change. And each cycle's extremes have come lower as the asset matures, so prior MVRV peaks are not fixed lines to trade against.

Takeaway

Realized cap values coins at last-moved price — the network's aggregate cost basis — and MVRV compares spot to that to gauge over- or undervaluation. Extremes have marked cycle turns, but it is structural, not a trigger. Read it with the short-term/long-term holder split and flow data, and discount it for lost coins and a maturing market.