Recently, Ethereum (ETH) has shown signs of dropping below $3,000, but it remains resilient as investors confidently defend this altcoin.
Currently trading at $3,480, let's see what could happen next with ETH.
Ethereum Still Has Significant Development Potential
A consistently reliable metric in analyzing Ethereum is the Market Value to Realized Value (MVRV) ratio, a tool for assessing holder profits and identifying potential market tops or bottoms. The MVRV ratio compares the market value of a cryptocurrency to its realized value, providing insights into whether the asset is overvalued or undervalued.
When the MVRV ratio increases, it indicates that many holders are in profit. However, if it rises to extreme levels, it suggests that the asset may be overvalued, increasing the risk of a price correction. Conversely, when the MVRV ratio decreases, it indicates a decline in profit.
If this ratio reaches extremely low levels, it is a signal for undervaluation, which may create attractive accumulation opportunities for investors. For ETH, the 30-day MVRV ratio has increased to 11.89%. However, this ratio is not close to the local peak, which is usually around 18% to 22%. Therefore, this development suggests that the price of Ethereum.
30-Day MVRV Ratio of Ethereum. Source: Santiment
Beyond the MVRV ratio, the Average Dollar Invested Age (MDIA) also suggests that Ethereum may avoid further depreciation. MDIA assesses the average age of all coins on the blockchain, calculated based on their purchase prices.
An increasing MDIA indicates that coins are becoming less mobile, reducing the likelihood of a significant price increase.
Conversely, a declining MDIA indicates that previously inactive coins are moving, signaling an increase in trading activity, which is true for ETH. If this trend continues, it could boost Ethereum's chances of a price increase.
90-Day MDIA of Ethereum. Source: Santiment
ETH Price Forecast: $4,000 May Be Approaching
On the daily chart, the price of Ethereum has formed an inverse head and shoulders pattern. This pattern often appears after a prolonged downtrend, marking the potential exhaustion point of sellers.
This pattern consists of three main parts: the left shoulder, indicating the initial bullish trend; the head, representing the end point of the bearish trend; and the right shoulder, signaling a recovery.
4-Hour Ethereum Analysis. Source: TradingView
With ETH in an upward trend, this cryptocurrency has the potential to rise close to $4,000 in the short term. Conversely, if selling pressure increases, this could change, and ETH may drop to $3,206.
Follow me @TinTucBitcoin #tintucbitcoin #Write2Win #btc #binance #bitcoin
