MVRV (Market Value / Realized Value)

MVRV (Market Value to Realized Value) is like a "hot or cold" indicator for the price of a cryptocurrency like Bitcoin. It compares two ways of measuring Bitcoin's value: the market value (the price everyone sees and uses today) and the realized value (the price at which each Bitcoin was actually bought or sold last).

Imagine you have a cake that is sold in pieces. The market value is the current price of each piece of cake if you were to sell it now. The realized value is the price each person paid for their piece of cake in the past. MVRV is the ratio between these two prices.

If the MVRV is high, it's like saying that the current price of the cake is much higher than what people paid for it in the past. This might mean that the cake is "hot" – perhaps so hot that it's overvalued, and people might want to sell their pieces before the price drops.

On the other hand, if the MVRV is low, it's like saying that the current price of the cake is not much higher than what people paid. This could mean that the cake is "cold" – possibly cold enough to be a good buying opportunity, as the price is expected to increase in the future.

Investors use the MVRV to try to understand whether Bitcoin is overvalued or undervalued. A very high MVRV might suggest that it's time to sell (because the price might fall soon), while a low MVRV might suggest it's a good time to buy (because the price might rise). It's like a thermometer to gauge if the market is overheated or too cold.