I was recently a guest on the Mr. M podcast, where the host, Maurizio (Mr. M), and I discussed many of the realities of investing in bitcoin that often aren’t discussed with enough nuance.

For context, Maurizio invited me onto the show because he wanted to discuss a Take I wrote last week entitled “Don’t Buy The Bitcoin Dip,” in which I shared that we’ve already been in a bitcoin bull market for over two years and that now likely isn’t the best time to make sizable bitcoin purchases. (Please note that, in the article, I didn’t encourage anyone to sell their bitcoin, nor did I suggest that they stop dollar-cost averaging into the asset.)

We discussed the piece and also touched on some other dynamics involved with investing in bitcoin that don’t often get brought up. So, I figured I’d share some bullet points from the conversation here as a teaser for the episode.

When investing in bitcoin, you can:

• Sell some if you need some cash, and it’s better to do this while bitcoin’s price is high
• Not go all in on bitcoin; having a cash buffer can be psychologically beneficial, as bitcoin is a volatile asset
• Consider timing when making larger bitcoin purchases; bitcoin’s price goes through boom and bust cycles, and it’s best to buy during bear markets

I share these points because, oftentimes, louder voices in the Bitcoin space broadcast messages like “Buy the dip” or “Never selling!” (my favorite example of this is the episode of What Bitcoin Did entitled “Buy the Fucking Dip” that was published at the near the tippy top of the 2021 bull market), prompting those new to the space or who might benefit from selling or spending some bitcoin during a bull market not to.

Had I not sold some bitcoin during the latter part of the previous bull run, I wouldn’t have had the cash buffer that made it easier for me to quit my previous job, which was making me miserable, so that I had some financial breathing room while looking for work in the Bitcoin space. And here I am now, writing articles for Bitcoin Magazine for a living in part because I sold some of my bitcoin.

So, please understand that Bitcoin is a tool that can be used in many different ways. Examine your life circumstances, and think for yourself when it comes to how to use your bitcoin. Don’t just listen to the devout HODLers who may make you feel like less of a Bitcoiner for doing what’s best for you.

This article is a Take. Opinions expressed are entirely the author’s and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

​ Ignore the mindless chanting of slogans, and do what you want with your bitcoin stack. 

The Bitcoin MVRV Z-Score has historically been one of the most effective tools for identifying market cycle tops and bottoms in Bitcoin. Today, we’re excited to share an enhancement to this metric that makes it even more insightful for today’s dynamic market conditions.

What Is the Bitcoin MVRV Z-Score?

The MVRV Z-Score is derived by analyzing the ratio between Bitcoin’s realized cap (the average acquisition cost of all Bitcoin in circulation) and its market cap (current network valuation). By standardizing this ratio using Bitcoin’s price volatility (measured as the standard deviation), the Z-Score highlights periods of overvaluation or undervaluation relative to historical norms.

View Live Chart 🔍

Peaks in the red zone signal overvaluation, suggesting optimal profit-taking opportunities. Bottoms in the green zone indicate undervaluation, often marking strong accumulation opportunities. Historically, this metric has been remarkably accurate in pinpointing major market cycle extremes.

While powerful, the traditional MVRV Z-Score has its limitations. In past cycles, the Z-Score reached values of 9–10 during market tops. However, in the last cycle, the score only reached around 7. This may be due to the rounded double-peak cycle instead of the sharp blow-off top we usually experience. Regardless, there’s the necessity to factor in the evolving market dynamics, with increasing institutional involvement and changing investor behavior.

The Enhanced MVRV Z-Score

The MVRV Z-Score standardizes the raw MVRV data using Bitcoin’s entire price history, which includes the extreme volatility of its early years. As Bitcoin matures, these early data points may distort its relevance to current market conditions. To address these challenges, we’ve developed the MVRV Z-Score 2YR Rolling. Instead of using Bitcoin’s entire price history, this version calculates volatility based only on the previous two years of data.

View Live Chart 🔍

This approach better accounts for Bitcoin’s growing market cap and shifting dynamics and ensures the metric adapts to more recent trends, offering greater accuracy for contemporary market analysis. It still excels at identifying market cycle tops and bottoms but adapts to modern conditions. In the last cycle, this version captured a higher peak value than the traditional Z-Score, aligning more closely with 2017’s price action. On the downside, it continues to identify strong accumulation zones with high precision.

Raw MVRV Ratio

Another complementary approach involves analyzing the MVRV ratio without standardizing for volatility. By doing so, we can see the previous cycle’s MVRV ratio peaked at 3.96, compared to 4.72 in the cycle before that. These values suggest less deviation, potentially offering a more stable framework for projecting future price targets.

View Live Chart 🔍

Assuming a realized price of $60,000 (factoring in the current projected increase over the next six months) and an MVRV ratio of 3.96, a potential peak price could be close to $240,000. If diminishing returns reduce the ratio to 3.0, the peak price might still reach $180,000.

Conclusion

While the MVRV Z-Score is still one of the most effective tools for timing market cycle peaks and bottoms, we need to be prepared for this metric potentially not reaching similar highs as prior cycles. By adapting this data to better factor in the changing market dynamics of Bitcoin, we can account for reduced volatility as BTC grows.

For a more in-depth look into this topic, check out a recent YouTube video here:
Improving The Bitcoin MVRV Z-Score

For more detailed Bitcoin analysis and to access advanced features like live charts, personalized indicator alerts, and in-depth industry reports, check out Bitcoin Magazine Pro.

Disclaimer: This article is for informational purposes only and should not be considered financial advice. Always do your own research before making any investment decisions.

​ We’ve enhanced the MVRV Z-Score to better reflect Bitcoin’s evolving market dynamics and reduced volatility. 

According to a press release sent to Bitcoin Magazine, an Office of California Assemblymember, Republican Phillip Chen, has appointed Proof of Workforce, a Santa Monica-based non-profit helping workers, unions, pensions, and municipalities with education-based Bitcoin adoption, to work on a variety of Bitcoin related initiatives and help with drafting an official bill for an upcoming legislative session.

“As to where and how Bitcoin and digital assets get into the trajectory of California, much is undetermined,” said Chen. “What is certain is that this industry is growing in adoption everyday, with Bitcoin serving as a global network and asset, representing 2 trillion dollars in value. Therefore, it’s important we take a meaningful look into its role in our great state of California.”

Proof of Workforce, led by its founder Dom Bei, will be advising Chen’s policy team, working on education and community engagement, and researching how Bitcoin can support and rebuild California’s infrastructure and communities.

“Bitcoin’s Genesis story has deep roots in California,” commented Bei. “A huge part of that Genesis Story is an innovative network, designed to protect the time, energy, and value of everyday, working people. Bitcoin isn’t partisan, it’s uniquely Californian.”

This isn’t Proof of Workforce’s first time helping onboard governments in California to Bitcoin. Last summer, Proof of Workforce partnered with the City of Santa Monica to open an official Bitcoin office. Since opening, the office has seen “an overwhelming amount of interest”, according to the city’s Mayor Lana Negrete. Santa Monica’s City Manager has also stated that other cities have reached out to learn more about their Bitcoin endeavors.

JUST IN: 🇺🇸 Santa Monica City Manager says “several other cities have reached out to learn more” about their official #Bitcoin Office 👀

“The Bitcoin Office has seen significant interest from the public” 🚀pic.twitter.com/ortfFTCx1S

— Bitcoin Magazine (@BitcoinMagazine) October 9, 2024

Mass adoption starts with initiatives like this. Bitcoin adoption within California’s government is beginning and with the United States embracing Bitcoin under President Trump, it is very likely that the adoption of this asset within the state government will continue over the coming years.

Over the years I’ve watched Dom Bei and Proof of Workforce onboard Careers in Government, firefighter unions in America, El Salvador, and Africa, workers, and more to Bitcoin. They’re doing it right by helping these organizations buy and hold their own bitcoin keys, making sure they’re all properly educated on not just bitcoin the asset but Bitcoin the network as well. One by one, Proof of Workforce is making real change that impacts people’s daily lives.

If you are not following Bei and Proof of Workforce on X, you should be. After talking with Dom personally, they are working on a lot of exciting initiatives that you’ll want to hear about — stay tuned.

This article is a Take. Opinions expressed are entirely the author’s and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

​ Bitcoin focused non-profit Proof of Workforce is working with the Office of California on legislation and Bitcoin initiatives.