AVIV_Ratio

Tech spec

Brief Description: Ratio of Active Market Cap to Investor Cap.

AVIV_Ratio, or the Active-Value-to-Investor-Value Ratio, is a variant of the Market-Value-to-Realized-Value (MVRV) ratio in Bitcoin on-chain analysis. It compares the Active Market Cap to the Investor Cap, offering a nuanced view of market conditions based on active economic participation. AVIV_Ratio is also called True Market Deviation.

AVIV_Ratio is defined by the cointime economics framework.

Interpretation AVIV_Ratio tends to oscillate around a value of 1.0 across different market cycles, showing a higher responsiveness during transitions between bull and bear markets compared to other MVRV variants. A value around 1.0 suggests a balance between the market valuation and investors' cost basis. Values significantly above or below 1.0 can indicate periods of market overvaluation or undervaluation, respectively, from the perspective of active market participants. T

Advanced Explanation The core of AVIV_Ratio lies in its focus on the economically active segment of the Bitcoin market. By comparing the Active Market Cap, which reflects the current market valuation of Bitcoin's active supply, to the Investor Cap, which represents the cumulative cost basis of Bitcoins held by investors, AVIV_Ratio provides a refined perspective on market dynamics. This ratio is particularly sensitive to changes in investor spending behavior and the realization of losses or gains, which are reflected in the Investor Cap but not the Thermocap.

AVIV_Ratio = Active Cap / Investor Cap

Cointime Economics is a new framework for Bitcoin onchain analysis published by James Check and David Puell. References: https://ark-invest.com/white-papers/cointime-economics/ and https://insights.glassnode.com/introducing-cointime-economics/