The yellow line represents the MVRV Z-Score Index Value. This Index is calculated by the formula (market cap – realized cap) / (market cap).
When the MVRV Z-Score rises to the red area, it signals that the price of BTC is too higher than the fair value price and this is the period when the BTC price has the highest potential to drop.
On the contrary, when the index falls into the green zone as at present, it means that the price of BTC is being lower than its realized price and this is the time when BTC has the highest chance to reverse strongly in price.
The two most recent BTC reversals took place at the same time when MVRV Z-Score hit the green zone in early 2019 and early 2018. According to this indicator, BTC is most likely making its next bottom to start a new uptrend.
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