This year had a positive start for the cryptocurrency market of 2023, with a significant increase from the closing weeks of 2022. Investor optimism has indeed increased by hopes that the Federal Reserve may ease interest rate hikes contributing in part to the green candles in the new year.
According to an on-chain indicator called the MVRV Z-score, assets like Dogecoin (DOGE), Shiba Inu (SHIB), Ethereum (ETH), XRP, Cardano (ADA), and Bitcoin (BTC) will all be undervalued in 2023. The MVRV Z-score indicates that Binance Coin (BNB), the platform’s native token, is overvalued in 2023 compared to the majority of other cryptocurrencies with significant market capitalizations.
When compared to Bitcoin, Ethereum, XRP, Cardano, and other meme coins, analysts at crypto data aggregator Santiment found that Binance Coin was a greater risk investment. The average addresses have fallen, indicating that these cryptocurrencies with high market capitalization are long-term low-risk investments.
What is MVRV Z-score?
The MVRV Z-score was used by the crypto analytics firm Santiment to put out the data and it should be noted that the indicator is frequently used to determine when a crypto asset is significantly over or undervalued. According to Santiment’s analysis of the provided chart, the assets in question might easily make up for price declines after 2022.
A measurement based on the market value and realized value of cryptocurrencies is called the MVRV Z-Score. Market value is the total worth of all previously minted currencies. This is calculated by multiplying the asset’s current price by the coin’s circulating supply.
The realized value is calculated by adding the most recent sale price of each token that has already been mined, when it was last transferred to a different wallet address, to the total selling price of every token that was in circulation at the time it was sold.
