Ethereum Faces Critical $5,000 Test as MVRV Ratio Approaches Bearish Threshold
Ethereum (ETH) is still trading close to its recent highs of over $4,600, although it has down 1% in the last 24 hours. Even though it is
Quick overview
- Ethereum is currently trading near its recent highs of over $4,600, despite a 1% decline in the last 24 hours.
- The ETH/BTC ratio remains weak at 0.039, struggling to reach the critical 0.05 level since July 2024.
- On-chain data indicates strong hodling sentiment, with an average of 56,000 ETH being withdrawn from exchanges daily over the past month.
- Technical analysts predict Ethereum could reach the $5,000 target, but caution is advised as the MVRV ratio approaches a historically significant level.
Ethereum ETH/USD is still trading close to its recent highs of over $4,600, although it has down 1% in the last 24 hours. Even though it is weak right now, the world’s second-largest cryptocurrency has still made a lot of money since its big summer rally, when it went up 155% to an all-time high of $4,957 in August.
ETH/BTC Ratio Struggles Below Key 0.05 Level Despite Institutional Adoption
The ETH/BTC ratio is still a worrying technical sign for Ethereum bulls. It is currently at 0.039 and has not been able to go back to the psychologically critical 0.05 level since July 2024. This ratio reached an all-time high of 0.14 in June 2017, but it has stayed weak even though many institutions have started using it and Ethereum’s price has just hit fresh highs.
Since its introduction in 2015, Ethereum has only been better than Bitcoin 15% of the time. Most of the time, this happened during the smart contract boom and ICO fever of 2015–2017. Since 2020, Bitcoin has regularly outperformed other cryptocurrencies, making it hard for Ethereum to keep up with Bitcoin’s performance.
MVRV Ratio at 1.97 Signals Caution as Bulls Eye $5,000 Milestone
Technical research shows that Ethereum’s Market Value to Realized Value (MVRV) ratio has reached 1.97, which is close to the historically important 2.4 bearish mark. Burak Kesmeci, a blockchain expert, says that this number shows that investors are now sitting on a lot of unrealized profits. In the past, when the price crossed above 2.40, it often led to big profit-taking and possible losses.
The 3.20 level is an even more important “very hot” zone where market enthusiasm has reached its highest point in the past, during the 2017 and 2021 bull runs, when there were huge rallies and then corrections. Ethereum seems to be in a rather secure zone for more upward movement right now, with an MVRV of 1.97. However, you should be careful when it gets closer to these important resistance levels.
Exchange Outflows Signal Strong Hodling Sentiment
On-chain data shows positive accumulation trends, with an average of 56,000 ETH being taken out of exchanges per day over the past 30 days. This steady negative netflow hasn’t been seen since the last weak market, when more over 400,000 ETH were shifted to non-custodial wallets for long-term storage on several days.
Exchange reserves have gone down by 20% since May, from 20.6 million ETH to 17.1 million ETH. This shows that investors are becoming more confident in Ethereum’s long-term prospects. This trend is similar to Bitcoin’s 23% drop in reserves, which suggests that several large cryptocurrencies are accumulating.
Ethereum Price Prediction: $5,000 Target Remains Within Reach
Technical analysts still think that Ethereum will reach $5,000, which it almost did in August, missing it by only $43. Jake Kennis from the blockchain research company Nansen said that the token may stabilize after its quick rise, which might mean that it takes weeks or even months to reach new all-time highs.
Strong on-chain indicators, ongoing outflows from exchanges, and institutional adoption all point to more upside. Traders should keep a careful eye on the MVRV ratio, though, because a break over 2.4 could cause profit-taking pressure and short-term pullbacks.
Ethereum is still on an upward trajectory, even though it has been volatile lately. It gained 8.75% in a week. The next big test will be whether bulls can keep up the pace over the $4,700 support level and move into the $5,000 psychological level in the following few weeks.
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