10 hours ago · 2 min read
Ethereum › Analysis
ETH down 33 percent since ATH, traders buying the dip
The market value of ether (ETH) has taken a big hit since all-time-high levels in november. Analysis of market sentiment shows bullish indicators as traders are buying the dip.
Ether, the native token of the Ethereum platform, and the second-largest digital asset by market cap, has seen a fall of its market value by 33 percent since the latest all-time-high on the 10th of November. In particular, ether’s market value took a big hit in the last 24 hours and went south by about ten percent.
At the time of writing, it looks like ETH bottomed out just above $3,100 on Friday morning UTC. The question every trader is asking is whether this is the bottom? Looking at the analysis of market sentiment, and according to ether’s average MVRV, this is the most “pain” traders have felt since July last year, from which time price jumped 118 percent from that pain point.
MVRV looks bullish
MVRV (market-value-to-realized-value) is a ratio of an asset’s market capitalization versus its realized capitalization. By comparing these two metrics, MVRV can be used to get a sense of when the price is above or below “fair value,” and to assess market profitability. Extreme deviations between market value and realized value can be used to identify market tops and bottoms as they reflect periods of extreme investor unrealized profit and loss, respectively.
Another indicator, active Ethereum addresses versus ETH asset price, also looks positive. Active addresses have been on the increase as the asset price moves down, indicating more market participants are active on the downturn market, presumably buying the dip, and perhaps stabilizing the market.
2022, the year of the merge
The first days of 2022 doesn’t look good for ETH, as the whole market is going south, but the assets did remarkably well during 2021. Last year the market value of ether went up over 450 percent, reaching an all-time high at $4878 on the 10th of November. Year-on-Year, ether is still up almost 170 percent.
2022 is the year of the Merge for Ethereum, as the blockchain changes its consensus algorithm from Proof-of-Work to Proof-of-Stake. So far things are working as planned, but this will probably be a make-or-break moment for the Ethereum system. Whether the merge is priced in is anybody’s guess.