One analyst explained that based on the on-chain price model, the next major targets for Ethereum could be $3,830 and $5,100.
The next targets for the Ethereum MVRV price band are $3,830 and $5,100.
new post At X, analyst Ali talked about the next major target for Ethereum based on the “MVRV price band”. “Market to Realized Value” (MVRV) is a widely used ratio in on-chain analysis calculated by dividing Bitcoin market cap by realized value.
Here, “realization limit” refers to BTC’s capitalization model, which assumes that the real value of every coin in circulation is the last value at which that coin was traded on the blockchain, rather than its current spot price.
The final transfer price of any coin can be considered the purchase price, so the realization limit takes into account the cost basis of all investors. Put another way, this indicator tracks the total amount of money holders have invested in cryptocurrency.
Therefore, the MVRV ratio tells us how the value (market capitalization) of an investor’s current holdings compares to his or her total investment. For this reason, the MVRV ratio is often used to determine whether an asset is currently overvalued or undervalued.
We now have a chart showing Ethereum’s “price bands” corresponding to various values of the MVRV ratio.
The trend in the MVRV Pricing Bands over the past few years | Source: @ali_charts on X
As shown in the graph above, Ethereum is currently trading above the 0.8 and 1.0 MVRV price bands. The MVRV ratios in these lines are 0.8 and 1.0, respectively.
If the price is below this line, the investor incurs a loss and the asset may be considered “undervalued.” Historically, this is where cryptocurrency bottoms are more likely to form.
ETH is currently in an upward trend and the gap with these lines is widening. We can see from the chart that the next important MVRV price bands are 2.4 and 3.2. At these levels, Ethereum is overheating as investors are holding much more than they are putting into the coin.
If this happens, the likelihood of profit taking becomes much higher, which could hinder price growth. In the past, major peaks for cryptocurrencies have formed when the price exceeds one or both of these levels.
These two MVRV price bands currently correspond to ETH prices of approximately $3,830 and $5,100, respectively. So these may be the upper bounds to watch for now. This is because an asset reaching its target may suggest that the asset is starting to become overvalued.
ETH price
Ethereum rose 4% over the past day, surpassing the $2,400 level.
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 illustration from Unsplash.com, chart from TradingView.com, Glassnode.com
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