.jpg)
A quantitative analyst explained how Ethereum is now in a secondary bullish phase according to the trend in this popular on-chain indicator.
Ethereum MVRV ratio forms a similar pattern to the previous two sessions
In CryptoQuant Quicktake mailan analyst spoke about the latest trend in the Market Cap to Realized Value (MVRV) ratio of Ethereum. the “MVRV ratio“It is an on-chain metric that tracks the ratio between the market value of an asset and its realized value.
the Maximum achieved Here he refers to the capitalization model that calculates the total value of ETH by assuming that the value of each token is equal to the price it was last transacted on the network.
In fact, the model is a measure of the sum of the cost basis of all tokens in circulation or simply, a measure of the amount of capital that investors have originally put into the asset. As such, the MVRV Ratio Index compares market value, which is simply the total value held by holders today, against that initial investment.
When the value of the measure is greater than 1, it means that the market value exceeds the realized value. This trend means that investors as a whole are in a state of net profit. On the other hand, its presence below the threshold indicates loss dominance in the market.
Now, here’s the chart shared by the analyst that shows how the Ethereum MVRV has changed over the past few years:
The value of the metric appears to have sharply been moving up in recent days | Source: CryptoQuant
As can be seen in the chart above, Ethereum MVRV rose to a relatively high level during the first quarter of the year as the price surge occurred. However, in the downward consolidation that followed this rise, the index pulled back down, returning to the neutral 1 level.
with The latest boom In the cryptocurrency, the MVRV ratio once again witnessed a reversal to the upside. Interestingly, something like this was also observed during the last two bull markets, as shown in the chart.
Both phases appear to have involved phases where Ethereum MVRV spiked to extreme levels, with a slowdown period occurring in between the phases.
If the current cycle were to show something similar, it was possible that the rally earlier in the year could be the first of the phases, with the recent rally potentially playing the role of the second phase.
In both previous cycles, a secondary uptrend took the price to levels significantly higher than the first cycle, so Ethereum may soon surpass the high it hit earlier in the year. This will only happen of course if this pattern continues during the current session.
Ethereum price
At the time of writing, Ethereum is trading at around $3,600, up roughly 8% over the past week.
Looks like the price of the coin has been on the rise recently | Source: ETHUSDT on TradingView
Featured image by Dall-E, CryptoQuant.com, chart from TradingView.com
