Market Premium Oscillator

How to read the Market Premium Oscillator

The Market Premium Oscillator measures how stretched Bitcoin's market value is relative to its realised value, using the market-realised cap gap as the object being normalised. Market cap reflects the current value of the network, while realised cap approximates the network's aggregate on-chain cost basis.

A positive reading means market cap is above realised cap, implying the network is in aggregate unrealised profit. A negative reading means market cap is below realised cap, implying the network is near or below its aggregate on-chain cost basis.

Because the oscillator divides the current premium by the historical volatility of that same premium, it is designed to show how unusual the current premium is relative to previous cycles. It is less focused on the absolute size of Bitcoin's market cap and more focused on whether the current gap between market value and realised value is historically stretched.

• Below 0 — Deep Value — Bitcoin's market cap is near or below realised cap, meaning the network is close to, or below, its aggregate on-chain cost basis. Historically, this has been rare and has often appeared around major bear-market lows. It does not guarantee a bottom, but it can indicate that long-term risk/reward has improved.
• 0 – 4 — Fair Value — Bitcoin is trading above realised cap, but the premium is not historically extreme. This range suggests the market is neither deeply discounted nor severely overheated relative to prior premium cycles. Long-term investors may treat this as a neutral accumulation zone rather than a strong valuation signal.
• 4 – 7 — Elevated — The market-realised cap premium is meaningfully above normal historical levels. This often reflects broad unrealised gains across the network and a stronger bull-market environment. New large allocations may carry less attractive long-term risk/reward, so this zone is better suited for reviewing exposure than aggressively increasing it.
• Above 7 — High Risk — The premium gap is historically stretched. This may indicate late-cycle conditions, elevated optimism, and a higher risk of poor forward returns from large new allocations. Price can still move higher, but long-term investors often become more cautious and may use this zone to review risk or gradually reduce exposure.

The Market Premium Oscillator is best used as a long-term cycle-risk indicator, not as a precise top or bottom signal. It can be used alongside the MVRV Z-Score to compare two related views of the same market premium: one scaled by market-cap volatility, the other scaled by the volatility of the premium itself.