The indicator allows you to judge how much an asset is overvalued or undervalued. If the MVRV falls below 1, the asset is considered undervalued. Undervalued assets are financial instruments whose market value is temporarily lower than their real (intrinsic) value. This means that the market underestimates the potential of an asset due to temporary difficulties, negative news background, general market fluctuations or other factors.

The current market cycle is noticeably different from previous ones, analysts say. When bitcoin was growing in the fall, it did not go into a pronounced revaluation zone. Consequently, the current decline may not repeat the scenarios of past market lows, meaning the drop will not be as deep, according to CryptoQuant.

"Experience shows that for most investment assets with long-term upward dynamics, it is precisely the periods of recession that become the time for effective preparation. It is at such moments that the likelihood of favorable results for the future increases," the analysts explained.

At the same time, bitcoin has just demonstrated realized losses of $2.3 billion. In terms of scale, this event is among the largest cases of capitulation in the history of BTC, CryptoQuant experts have noticed. The event is comparable to the crisis of 2021, the collapse of Luna and FTX in 2022, as well as the mid-2024 correction.