The MVRV Ratio simply divides Market Value by Realized Value:

During the 2021–2022 NFT mania, Ethereum’s MVRV Z-Score spiked toward 6, signaling extreme market overheating before the subsequent downturn.

Historically, Ethereum's MVRV Z-Score has been a useful indicator of overbought and oversold conditions. For example, during the 2017 bull run, Ethereum's MVRV Z-Score reached an all-time high, indicating that the asset was significantly overvalued. Subsequently, the price of Ethereum experienced a sharp correction.