According to the latest on-chain data, Ethereum appears to be entering a state of undervaluation, with the potential of rebounding to new highs. However, the question is — is it really time to buy ETH?
ETH Could Drop Another 40% Before Bear Cycle Ends
In a new Quicktake post on the CryptoQuant platform, crypto analyst Burak Kesmeci shared that Ethereum, the second-largest cryptocurrency by market cap, is starting to become relatively cheap. The relevant on-chain indicator in this observation is the MVRV (Market Value to Realized Value) ratio, an indicator that compares a coin’s market cap and its realized cap.
Typically, the MVRV ratio offers insight into how the value the investors (of Ethereum, in this case) hold (the market cap) measures against the value they put in (the realized cap). When the value of this ratio is greater than one, it means that more investors are in profit at the moment. On the flip side, a lower-than-one ratio suggests that holders are currently underwater.
Typically, high MVRV values are considered cycle top signals, while a low ratio indicates that the cryptocurrency has either reached or is close to a bottom. According to Kesmeci, the Ethereum MVRV is currently at 0.9, meaning that ETH might be getting undervalued.
However, Kesmeci mentioned that while Ethereum is indeed cheap, there is still a chance the altcoin gets cheaper from its current price point. To explain this point, the analyst highlighted the Realized Price Bands metric, noting that the ETH price has often gravitated toward the green band (the Realized Price lower band) in bear cycles.
According to data from CryptoQuant, the green band currently sits at around $1,152, suggesting a potential further downturn of over 40% from the current price point.
Kesmeci added:
So yes, MVRV at 0.9 confirms ETH is getting cheaper. But the chart also clearly shows that MVRV has a habit of pushing down to 0.5 and below during full bear cycles. The Realized Price Bands confirm the same picture. Ethereum can dive into much colder waters from here.In summary, the Ethereum price is at risk of further downside from its current price point, despite being nearly 60% down from the current cycle high.
Prediction Market Bets On Ether Losing No. 2 Crypto Spot
According to an ongoing prediction market on Polymarket, Ethereum is being projected to lose its position as the second-largest cryptocurrency. The odds of the altcoin getting flipped rose to as high as 57% on the prediction market platform on Saturday.
As of this writing, the Ether token is valued at around $2,090, with a market capitalization of over $253.1 billion. According to CoinGecko, the closest cryptocurrency (excluding stablecoins) to ETH is BNB, with a market capitalization of over $89 billion.
Featured image by DALL-E, chart from TradingView