Bitcoin's MVRV at 1.1: A Flow of Unrealized Losses Signals Cycle Bottom

The MVRV ratio is a core on-chain flow indicator used by professional investors to gauge market sentiment and potential turning points. It compares Bitcoin's market capitalization to its realized capital, which is the aggregate price at which all coins last moved on-chain. When the ratio falls below 1.0, it signals that the broader supply is sitting at an unrealized loss, a condition the metric often flags as undervalued.

The current reading is extreme. The ratio has fallen to 1.1, its lowest level since early 2023. This deep decline from its peak of 2.28 in October 2025 underscores a massive shift in the network's cost basis. The drop to this level, approaching the critical 1.0 threshold, has historically coincided with cycle bottoms and preceded extended rallies.

Historical precedent is striking. The last time the MVRV ratio dipped below 1.0 in early 2023, it preceded a rally of more than 500% over the following two years. This pattern suggests that when the market-wide unrealized loss pool becomes sufficiently large, it can set the stage for a powerful reversal. The current flow of unrealized losses is a key signal in this unfolding cycle.

Price Action and the Flow of Selling Pressure

Bitcoin is trading near $67,000, down roughly 46% from its October 2025 all-time high of approximately $126,200. This steep decline has driven the MVRV ratio to its current level of 1.1, its lowest since early 2023. The flow of selling pressure has been intense, as the ratio has fallen sharply from its peak of 2.28 in October.

That peak reading is telling. At the October high, the MVRV ratio stood at 2.28-a level that was high but notably lower than the extreme tops above 3.5 seen in 2017 and 2021. This suggests the recent sell-off has been more pronounced in terms of realized losses. The market-wide cost basis has shifted dramatically, with a massive pool of unrealized losses now in play.

The implication is clear. A ratio approaching 1.0 signals that the broader supply is sitting at a significant loss. This flow of unrealized losses is the core mechanic behind the MVRV bottom signal. It represents a deep reset in the network's aggregate cost basis, a condition that has historically preceded powerful rallies after extended bear markets.

Catalysts and Risks: Flow Dynamics Ahead

The critical threshold to watch is 1.0. A sustained break below this level has historically coincided with cycle bottoms and preceded extended rallies. The market is now in a state of deep flow, with the MVRV ratio at 1.1 and the broader supply sitting at a significant unrealized loss. The primary risk is that this flow of selling pressure and unrealized losses continues, delaying a bottom and potentially testing lower price targets.

A related metric deepens the case for extreme undervaluation. The MVRV Adaptive Z-Score hit -2.66, a level described as a "capitulation zone" that is lower than past bear market bottoms. This Z-score uses bands to identify extremes relative to fair value, and its current reading signals that Bitcoin's market value is far below its realized cost basis. This flow dynamic suggests a network-wide reset in cost basis is underway.

The key watchpoint is the flow of long-term holder behavior. Glassnode data showed long-term holders reducing exposure by roughly 245,000 BTC in a single day in early February, a pace that mirrors patterns seen before prior cycle bottoms. Confirmation of the undervaluation thesis will come when this distribution flow slows and reverses, signaling that the deepest losses are being absorbed.