I'm afraid that is a folk etymology, the second part means "to eat", related to contemporary Russian есть "jest'". The /v/ sound actually comes from the short /u/ at the end of the word medъ, usually denoted with the letter ъ, probably through an intermediate /w/. The yer, ъ, became silent in Russian and was removed from the orthography in 1918, but a relic of it remained like this in the middle of the word medved'.
TIL. Ok, so it's "honey eater" then. The point is it's clearly a taboo avoidance term, not a derivation of "arctos" which was the real word for bear.
is it “knows” or “eats” or “finds”? i’ve heard all three