An analyst has explained that $3,830 and $5,100 could be the next major targets for ethereum based on an on-chain pricing model.
ethereum MVRV Price Bands Have Next Targets at $3,830 and $5,100
in a new mail On X, analyst Ali talked about the next key targets for ethereum based on “MVRV price bands.” “Market Value to Realized Value” (MVRV) is a popular ratio in on-chain analysis that is calculated by dividing bitcoin's market capitalization by its realized capitalization.
The “realized limit” here refers to a capitalization model for btc that assumes that the true value of any coin in circulation is not the current spot price, but the value at which the last transaction with the coin was made on-chain of blocks.
The last transfer price of any currency can be considered as its purchase price, so the realized limit considers the cost base of all investors. Put another way, the indicator tracks the total amount that holders have invested in the cryptocurrency.
Therefore, the MVRV index tells us how the value investors have right now (the market capitalization) compares to the total investment they made. Because of this, the MVRV ratio is often used to judge whether the asset is currently overvalued or undervalued.
Now, here is a chart showing the “price bands” for ethereum corresponding to different values of the MVRV ratio:
<img decoding="async" class="alignnone aligncenter" src="https://technicalterrence.com/wp-content/uploads/2024/01/3830-and-5100-Ethereum-Next-Top-Targets-According-to-This.jpeg" alt="ethereum MVRV Ratio” width=”2362″ height=”1494″ loading=”lazy”/>
The trend in the MVRV Pricing Bands over the past few years | Source: @ali_charts on X
As shown in the chart above, ethereum is currently trading above the 0.8 and 1.0 MVRV price bands. In these lines, the MVRV ratio is 0.8 and 1.0, respectively.
When the price is below these lines, investors are in a state of loss and therefore the asset can be considered “undervalued.” Historically, this is where funds for cryptocurrency are most likely to form.
Currently, eth is rising and the gap with these lines is widening. From the chart you can see that the next important MVRV price bands are 2.4 and 3.2. At these levels, ethereum becomes overheated as investors carry much more than they invest in the coin.
When this happens, profits are much more likely to be made, which can prevent any price increases. In the past, major cryptocurrency highs were formed when the price was above one or both levels.
These two MVRV price bands currently correspond to eth prices of around $3,830 and $5,100, respectively. Therefore, these ceilings may need to be watched currently, as the asset hitting targets could mean that it is starting to become overvalued.
eth price
ethereum has enjoyed a 4% jump over the past day and has broken through the $2,400 level.
<img loading="lazy" decoding="async" class="alignnone size-medium aligncenter" src="https://technicalterrence.com/wp-content/uploads/2024/01/3830-and-5100-Ethereum-Next-Top-Targets-According-to-This" alt="ethereum price chart” width=”1534″ height=”868″/>
Looks like the value of the coin has registered a sharp increase over the last 24 hours | Source: ETHUSD on TradingView
Featured image by DrawKit Illustrations on Unsplash.com, Charts by TradingView.com, Glassnode.com
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