"MVRV Needs a New Framework." Since the approval of Bitcoin ETF, MVRV is no longer the valuation model it used to be. Since last year, I have consistently written about how changes in market structure and trading behavior have transformed the interpretation of on-chain data. That research ultimately led to the launch of along with my insight report titled: "Changes in Market Structure and Trading Patterns After the Bitcoin ETF Approval." A few days ago, I also shared several of the major structural changes that have taken place since ETFs were introduced. Today, I'd like to focus on one of the most widely used on-chain indicators: MVRV. Let me begin with the conclusion. "Since the approval of Bitcoin ETF, MVRV has become much less effective as a traditional valuation model. It now requires a new framework for interpretation." Furthermore, "If the next market cycle is once again driven primarily by ETF inflows and institutional custody flows, MVRV is more likely to remain in a relatively low range rather than expanding sharply as it did in previous cycles." 1. Why am I discussing this now? The ideas presented here will ultimately be validated only after we have gone through both the current bear market and the next bull market. However, discussing them only after everything has already happened may be valuable from a research perspective, but it offers little value from an investment or trading perspective. I believe understanding structural changes before the market fully reflects them is far more valuable. The detailed mechanism behind this view will be explained in a future report. 2. MVRV Needs a New Framework For years, the market has generally interpreted MVRV as follows: - MVRV below 1 = Undervalued - MVRV above 4 = Overvalued I no longer believe these thresholds can be applied in the same way after the approval of spot Bitcoin ETF. This is not limited to MVRV. Many on-chain indicators now require new interpretation standards because the underlying market structure itself has changed. 3. The Data Has Already Changed Unlike previous cycles, MVRV failed to expand significantly during this bull market. Bitcoin continued making new highs, yet MVRV largely moved sideways after the ETF approval.(Yellow Box) I do not believe this is simply a coincidence. I believe it reflects a fundamental change in market structure. 4. The Bottom May Also Behave Differently If the upper valuation range has structurally changed, then the lower valuation range is also likely to behave differently. Simply relying on historical MVRV levels may increase uncertainty rather than reduce it. Previous cycle lows were: - 2015: 0.65 - 2019: 0.69 - 2022: 0.78 After MVRV first fell below 1, Bitcoin experienced additional declines of: 2015: -54% (392 days to recover above MVRV 1) 2019: -48% (189 days) 2022: -23% (217 days) In other words, if you begin accumulating simply because MVRV falls below 1, you must also consider how much further price declined historically and how long recovery actually took. More importantly, MVRV has not even reached 1 yet in the current cycle. 5. What If Institutional Liquidity Doesn't Return? If Bitcoin falls below $60,000, yet ETF inflows, OTC institutional demand, and large buyers such as Strategy fail to return, then MVRV may fall to levels even lower than those seen in previous cycles. Anyone considering dollar-cost averaging after MVRV falls below 1 should take this possibility seriously. 6. The Most Dangerous Misconception Many investors tend to underestimate downside risk simply because the undervaluation range appears numerically narrow. Overvaluation is often viewed as an open-ended range, while undervaluation is mentally limited to the 0–1 range. This creates the false impression that downside risk is also limited. However, history shows that Bitcoin declined by more than 50% while MVRV was moving toward its cycle lows. Even within the seemingly narrow 0–1 range, MVRV can continue falling much further. If MVRV eventually reaches 0.6 or even lower, investors should reconsider whether their existing accumulation strategy remains appropriate. 7. How Should MVRV Be Interpreted Going Forward? Going forward, I believe MVRV should be viewed less as a traditional valuation model, and more as an indicator reflecting ETF and institutional liquidity conditions. In other words, a low MVRV may no longer simply imply that Bitcoin is undervalued. It may instead indicate that meaningful institutional liquidity has not yet returned to the market. 8. The Next Cycle May Look Very Different If ETFs and institutional custody continue to dominate Bitcoin liquidity during the next bull market, I do not expect MVRV to expand dramatically as it did in previous cycles. Instead, it is more likely to remain within a relatively low range for an extended period of time. When that happens, I believe the market will naturally begin discussing a new framework for interpreting MVRV. Ps. This discussion is not only about MVRV. I believe the approval of spot Bitcoin ETFs fundamentally changed the structure of the Bitcoin market, and as a result, the interpretation of many on-chain indicators must also evolve. The detailed mechanism behind this view will be published in the coming months.(mignolet)