Ethereum (ETH), the second largest cryptocurrency by market capitalization, continues to grow slightly below the psychologically vital $4,000 price level, following a brutal pullback on October 9 during which the digital currency tested support at around $3,435.
Ethereum remains above the realized price – will the dynamics enhance soon?
According to a CryptoQuant Quicktake post by contributor TeddyVision, Ethereum is trading above the realized price at around $2,300. Calling this price level a “fundamental support zone,” the analyst said that historically, any declines below this level signaled a capitulation phase.
For the uninitiated, the realized price represents the average cost basis of all ETH holders, calculated by dividing the total value of all ETH at the time they were last moved on-chain by the current circulating supply.
The realized price effectively shows the “true” average price paid by investors, serving as a key indicator of whether the market is making profits or losses. As long as ETH is trading above the realized price, the market structure will likely remain bullish.
The analyst also highlighted Ethereum’s market value to realized value (MVRV). It is worth noting that ETH holders are currently making an average of 67% profit on their cost basis. This indicator gives two main clues about the current market.
First, it shows that while the market is profitable, it is still far from “overheated” levels. Secondly, it indicates that market participants are confident of market growth, but are not euphoric.
To explain this, the MVRV ratio compares the market value of an asset with its realized value. A higher MVRV indicates that holders have greater unrealized gains – often signaling potential overvaluation – while a lower MVRV suggests undervaluation or fear in the market.
Additionally, TeddyVision has seen Ethereum react from the upper end of the realized price range, which is currently around $5,300. The analyst noted:
Price retreated before reaching the “Overheat Zone. This is not a reversal – it is a post-distribution consolidation phase, a hearty recovery period without structural damage.
Finally, ETH spot inflows to cryptocurrency exchanges are also slowing, suggesting that the next enhance in the value of this digital asset will likely depend on fresh liquidity rather than leverage. To summarize, Ethereum is slowly moving from a distribution phase to a consolidation phase.
Is this a good time to buy ETH?
While providing reliable future predictions for the cryptocurrency market remains a complex task, fresh on-chain and exchange data indicate that ETH is regaining its bullish momentum. For example, Binance funding rates recently he suggested that ETH could rise to $6,800.
Similarly, ETH reserves on exchanges continue to decline at a rapid pace. Earlier this month, ETH supply on exchanges hit the lowest level in many years, increasing the likelihood of a potential “supply crunch” that could dramatically enhance the price of ETH.
This was recently said by cryptocurrency analyst Nik Patel warned that the ETH price correction may not be over yet. At press time, ETH is trading at $3,849, up 0.3% over the past 24 hours.
Featured image from Unsplash, charts from CryptoQuant and TradingView.com
