Ethereum Bearish Signal: MVRV Has Entered The “Danger” Zone
01 November 2023 - 5:00AM
NEWSBTC
On-chain data shows the Ethereum Market Value to Realized Value
(MVRV) ratio has entered inside a danger zone that has historically
led to tops. Ethereum MVRV Ratio Has Surged Into The Danger Zone
Recently In its latest insight post, the on-chain analytics firm
Santiment has talked about some underlying metrics related to ETH.
First, the firm has pointed out how the trading volume of the
cryptocurrency has gone down since Ethereum’s surge from a few days
back. The value of the metric has been sharply going down recently
| Source: Santiment The trading volume observing a significant
decline while the price is trying to continue its rally could
indicate that momentum is weakening for the cryptocurrency. Related
Reading: Is Bitcoin Top Here? This Metric Would Say Otherwise One
positive for the asset, though, could be the fact that the supply
on exchanges has gone down since the rally started, implying that
the investors have made net withdrawals. Looks like the metric has
plunged | Source: Santiment Generally, investors transfer their
Ethereum out of these central entities to hold onto it in
self-custodial wallets for extended periods, so this decline in the
supply on exchanges could be a sign of fresh accumulation.
Following the latest rise in the asset, its social dominance has
also seen a jump. The “social dominance” here refers to the
mindshare that Ethereum occupies on social media platforms among
the top 100 cryptocurrencies by market cap. Interest around ETH has
grown in the last few days | Source: Santiment It would appear that
more eyes have been turning at Ethereum recently, which can be a
sign that hype is building up among the traders. Historically, too
much hype has been negative for the asset, as it has often led to
top formations. So far, though, the social dominance is still
notably below the levels it was at when ETH hit its local top at
the start of this month, as is apparent in the above chart.
According to Santiment, this “may suggest there can be some room
for it to go before things cool down.” A signal that is more
concretely bearish for Ethereum, however, is the 30-day MVRV ratio.
In simple terms, what this ratio tells us is how the value that
investors are holding (the market cap) compares against the capital
that they invested into the asset (the realized cap). The indicator
appears to have entered the danger zone | Source: Santiment Here,
Santiment has used the 30-day MVRV ratio, which means this
indicator only keeps track of the investors/addresses who bought
their coins within the last 30 days. Related Reading: Bitcoin Solid
Above $34,000 Despite High Short-Term Holder Profit-Taking As shown
in the chart, this Ethereum indicator has recently risen into a
territory that the analytics firm labels as a “danger zone.”
Historically, the price has seen a correction not too long after
the metric has reached this zone so another local top may be due
for Ethereum right now. ETH Price At the time of writing, Ethereum
is trading at around $1,800, up 1% in the past week. ETH has been
stuck in consolidation recently | Source: ETHUSD on TradingView
Featured image from Kanchanara on Unsplash.com, charts from
TradingView.com, Santiment.net
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