Blockchain analytics firm Santiment is issuing a warning to investors that top altcoin Ethereum (ETH) is at risk of falling further based on a key metric.
In a new article, the market intelligence company says that based on ETH’s Market Value to Realized Value (MVRV) over a seven-day period, the second-largest crypto asset by market cap is now in a “danger zone.”
“ETH’s MVRV 7D which measures the short-term profit/loss of holders is showing that we have entered the danger zone and reached the peak in the past three months, which historically saw short-term holders who are well in profit….take some off the table.”
An asset’s MVRV is determined by dividing its market value by its realized value. An elevated MVRV value suggests that there is a high level of unrealized profit, and thus a risk of investors liquidating their assets for gains.
On the other hand, a low MVRV suggests that there is a low level of unrealized profits which could be an indication that an asset is undervalued or is suffering from low demand.
According to Santiment, Ethereum dropping in price and MVRV could be healthy for the second-largest crypto asset.
“A drop in price and MVRV in coming days would help make for a good reset and opportunity.”
Santiment also warns that Ethereum’s price action is flashing bearish signals and says that bulls need to step up to avoid a potential sell-off event.
“Following the January 2022 lows, February has put in a higher low so far. Bulls better hope that resistance around $3100 – $3200 [range] breaks to establish a higher high for further continuation.
Falling back to low $2,000s wouldn’t be pretty.”
Ethereum is trading at $2,631 at time of writing.
Check Price Action
Don’t Miss a Beat – Subscribe to get crypto email alerts delivered directly to your inbox
Follow us on Twitter, Facebook and Telegram
Surf The Daily Hodl Mix
Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
Featured Image: Shutterstock/bestfoto77/monkographic
Source: https://dailyhodl.com/2022/03/05/ethereum-eth-has-entered-a-danger-zone-heres-when-that-could-change-according-to-crypto-analytics-firm/
