A key price metric suggests that bitcoin is now undervalued and could be trading around a major bottom.

According to a report by CoinDesk and using data from analytics firm Glassnode, bitcoin’s market value to realized value (MVRV) z-score indicates that the currency is significantly undervalued after falling more than 60% in the last month.

Bitcoin’s MVRV fell below zero for the first time in twelve months on Mar. 13  and was standing at -0.18 as of Monday. A negative z-score suggests the asset is undervalued and could be trading near its market bottom. 

Market value is calculated as the total dollar value of the supply in circulation averaged across multiple exchanges, while realized value approximates the value paid for all coins in existence by using the last time they moved on the blockchain. The report claims that realized value is a better approximate for fair value due to its adjustment for coins lost or held in long-term accounts. 

The MVRV z-score is a representation of the disparity between the market and realized value, with a negative number indicating that bitcoin is undervalued. 

The report also claims that a negative z-score has historically correlated to market bottoms, including when bitcoin fell to $3,200 in December 2018 before rebounding.

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