As of now, Ethereum (ETH) is trading at a solid $3,480, showing resilience despite signs of potentially falling below the $3,000 mark. Analysts attribute this stability to the bullish defense of the altcoin, hinting that Ethereum still has more room to grow.
The Market Value to Realized Value (MVRV) ratio, a key analytical tool for evaluating Ethereum’s performance, has been instrumental in this prediction. The MVRV ratio offers valuable insights into a cryptocurrency’s market value in comparison to its realized value. This comparison allows analysts to determine whether a cryptocurrency is overvalued or undervalued.
When the MVRV ratio increases, it signifies that more holders are profiting. However, if it spikes to an excessively high level, it suggests the asset might be overvalued, which could lead to a price correction. On the other hand, a decreasing MVRV ratio implies a decrease in profitability. When the ratio hits an extremely low level, it indicates undervaluation, creating an attractive opportunity for investors to accumulate more of the asset. Currently, Ethereum’s 30-day MVRV ratio stands at 11.89%. However, it is not near the local top, typically around 18% and 22%, suggesting a promising outlook for Ethereum’s price.
Another important metric, the Mean Dollar Invested Age (MDIA), also points to Ethereum evading a further price drop. The MDIA measures the average age of all coins in a blockchain, weighted according to their purchase price. An increasing MDIA indicates stagnation of coins, reducing the chances of a significant price surge. However, a decreasing MDIA, as is the case with Ethereum, implies that previously dormant coins are moving, signaling increased trading activity. If this trend continues, Ethereum’s chances of a price rally could be boosted.
On the daily chart, Ethereum’s price has formed an inverse head-and-shoulders pattern. This pattern typically surfaces after a significant downtrend, indicating a potential point of sellers’ exhaustion. The pattern consists of three key parts: the left shoulder, marking the first uptrend; the head, signalling the end of the downtrend; and the right shoulder, indicating the rebound.
With Ethereum currently trending upwards, analysts predict that the cryptocurrency is likely to rise to around $4,000 in the short term. However, if selling pressure increases, the situation could change, and Ethereum could potentially drop to $3,206. Therefore, investors are encouraged to monitor the market closely and make informed decisions.
