The MVRV Z-score is a function of the difference between total market cap and realized market cap, divided by the standard deviation of the market cap. This shows by how many standards deviations the market value differs from the realized value.
It evaluates if Bitcoin is over or under-evaluated compared to its "normal" value.
This indicator shows if investors are currently making profits. Above 7, there is a high probability that the market is in a bubble about to burst. Below zero, the market is bleeding.