🎧 Morning Brief #114 - audio debate on today’s market setup
Two cycle indicators are sending divergent signals: the MVRV Z-Score has already dropped below the levels seen at the bear market lows of 2018 and 2022, while NUPL remains far from capitulation zones - psychologically confirming that the market is in a phase of weakening, not full capitulation.
TL;DR
This brief examines the divergence between the mathematical and psychological assessments of the cycle bottom. The MVRV Z-Score signals anomalous pressure relative to past cycles, but NUPL does not confirm capitulation - and historically, sustained cycle reversals have rarely formed without it.
Bitcoin MVRV Z-Score: Bull vs Bear Market Regimes
MVRV Z-Score is a normalized deviation of market capitalization from realized capitalization; negative values indicate that the market is trading below the on-chain "fair value" price.
The current Z-Score stands at -2.28 with price at ~$66,600 and an MVRV ratio of 1.25x. Historical context matters: the bear market bottom of December 2018 formed at a Z-Score of approximately -1.6, while November 2022 printed a low of around -1.4. This means the current reading of -2.28 is already below the levels at which the key lows of the 2018 and 2022 bear cycles were established - the market is in a statistically unusual compression zone relative to realized capitalization. The cycle's local minimum was recorded on February 5, 2026, at -3.38, and current values represent a partial recovery from that low.
The anomaly is explained by the scale of realized capitalization in the ETF era: a massive influx of institutional capital has raised the network's cost basis, making the Z-Score more sensitive to price corrections. A recovery of the Z-Score above -1.5 while price holds above $65,000 would be the first technical confirmation of an exit from the pressure zone.
Bitcoin NUPL: Market Sentiment Zones
NUPL reflects the aggregate unrealized profit/loss of all coins on the network; the value is normalized against Bitcoin's full history, enabling comparison of psychological sentiment across different cycles.
The current NUPL is 0.197, NUPL 7D is 0.180, zone - "Hope." Momentum remains downward, though the pace of decline has slowed. For scale: during real capitulations (December 2018, March 2020, November 2022), NUPL dropped into negative territory, recording a net loss for the majority of holders. The current value of 0.197 sits in the middle of the historical range, far from zones of genuine pain.
The psychological picture is one of weakening sentiment without panic. Most participants are still holding positions in profit (NUPL > 0), but conviction has faded. A break of NUPL below zero would be the emotional trigger that has historically preceded the formation of a cycle market bottom.
Connecting the dots: the divergence between the two metrics forms the central thesis of this brief. The MVRV Z-Score is already anomalously low relative to past bear phases - mathematical pressure is present. But NUPL does not confirm capitulation - the psychological breakdown has not yet occurred.
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FAQ
Why is the MVRV Z-Score lower now than at the 2018 and 2022 bottoms, yet price has not collapsed?
Realized capitalization has grown significantly due to institutional inflows via ETFs, raising the network's cost base and making the Z-Score more sensitive to corrections. In other words, the same level of "pain" by Z-Score is now reached at a smaller relative price drawdown. This is a new structural feature of the 2025–2026 cycle.
What needs to happen to confirm a reversal?
Two simultaneous signals: the MVRV Z-Score sustainably recovers above -1.5 (exit from the Strong Bear zone) and NUPL stops declining and begins recovering toward the "Optimism" zone. The risk scenario for deeper correction is a return to Z-Score -3.38 or below, which - combined with continued downward NUPL momentum - would form a genuine capitulation.
CONCLUSIONS
The MVRV Z-Score at -2.28 - anomalously low, historically deeper than the bottoms of 2018 and 2022 - signals structural pressure on the market. However, NUPL in the "Hope" zone does not confirm capitulation: the majority of holders remain in profit, and no psychological flush has occurred. The current regime is neutral-to-bearish with a risk of further deterioration. The primary reversal trigger is synchronization of both indicators: a recovery of the MVRV Z-Score above -1.5 alongside stabilization of NUPL momentum. The primary risk is a return to the February lows, which - without support - would open the path to genuine capitulation and the formation of a true cycle bottom.