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October 8, 2022
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Ethereum is down 33% since ATH, traders buy on dip

Ethereum’s market value has taken a big hit from all-time highs in November. Analysis of market sentiment shows bullish indicators as traders are buying on the decline.

Ethereum, the second largest digital asset by market capitalization, has seen its market value drop 33% since the last all-time record on November 10th. In particular, the market value of Ethereum has taken a big hit in the last 24 hours and has dropped by around 10% as published by Cryptoslate.

As of this writing, Ethereum was trading at $3,250 on Friday morning. The question every trader is asking is whether that $3,144 amount really hit rock bottom. Looking at the analysis of market sentiment, and according to Ethereum’s average MVRV, this is the biggest “problem” traders have felt since last July, when the price jumped 118 percent from that pain point.

MVRV looks optimistic

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 the tops and bottoms of the market as they reflect periods of extreme investor unrealized gains and losses, respectively.

Other indicator, Ethereum active addresses versus Ethereum asset price, also looks positive. Active addresses have increased as the asset price falls, indicating that more market participants are active in the slowing market, presumably buying the dip and perhaps stabilizing the market.

2022, the year of the merger

If the first days of 2022 don’t look good for Ethereum, as the whole market is heading south, but assets did extraordinarily well during 2021. Last year, Ethereum’s market value rose more than 450%, reaching a high all-time at $4878 on November 10th. Year after year, Ethereum is still up nearly 170%.

The current year, 2022, is the Ethereum Merger year, 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 likely be a turning point for the Ethereum system. Whether the merger price is uncertain is anyone’s guess.

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