Finance

ETH valuation metric is ‘heating up,’ but analyst says it’s not overvalued

A key metric used to determine whether Ether (ETH) is overvalued or not has been “heating up” relative to Bitcoin (BTC) — though one analyst argues the asset may not be in overbought territory just yet. 

Crypto analysis firm CryptoQuant CEO Ki Young Ju noted that while Ethereum’s Market Value Realized Value (MVRV) is rising quickly — it has also come with an uptick in transaction volume and active addresses on the Ethereum network.

“ETH MVRV is rising faster than BTC MVRV, suggesting ETH market is heating up relative to its on-chain fundamentals,” Ju wrote in a June 19 X post.

The MVRV indicates when an asset is trading above or below its fair price, which is essentially the difference between the price users paid for the asset and the current market price.

In comparison to Bitcoin over the past 30 days, Ethereum’s MVRV has jumped 29.9% to reach 91.43%, while Bitcoin’s MVRV has gone the other way, falling 10.8% to reach 127.41% over the same period, as per Santiment data.

Ethereum MVRV ratio chart. Source: Santiment

A high MVRV means the market value of Ether is higher than its realized value — suggesting it is overvalued, which can fear a potential sell-off in the future.

When it declines it suggests that the market is cooling off, and the price may be getting nearer to its fair value.

However, Ju suggests with spot Ether ETFs expected to be trading soon, the high MVRV is unlikely to scare away investors.

“Given the current ETF situation, this might be an ETH-only season,” Ju added, referring to the timeline for ETF trading, which is SEC Chair Gary Gensler reportedly said will start “over the course of this summer,” while ETF analyst Eric Balchunas suggested it could begin as early as July 2.

Ether heads to $10,000 by end of 2024: Analyst

Pseudonymous crypto technical analyst Yoddha pointed to Ether’s current price position on the chart, noting there’s been slight consolidation following a morning star formation — a signal of a bullish reversal from the bottom of a downtrend.

“Ethereum is holding up the price pretty well and looks ready to go bonkers,” pseudonymous crypto technical analyst Yoddha wrote on June 19.

“It will be above $10,000 before the end of year. Mark my words,” Yoddha added.

Related: Ethereum (ETH) price fails to rally in the face of good news — Here is why

Ethereum is trading at $3,556 at the time of publication, according to CoinMarketCap data.

Ethereum is up 14.81% over the past 30 days. Source: CoinMarketCap

On June 18, it climbed back above the crucial $3,500 mark, a 1.37% increase, following Consensys’ announcement that the United States Securities and Exchange Commission (SEC) is ending its investigation into whether ETH qualifies as a security.

Ethereum’s dominance in the cryptocurrency market is also growing significantly, up 6.62% over the past seven days, according to TradingView data. Meanwhile, Bitcoin’s dominance has slightly dropped 0.23% over the same period.

At the time of publication, Ethereum’s dominance is 18.8%, while Bitcoin’s is 55.31%.

Magazine: Ethereum’s recent pullback could be a gift: Dynamo DeFi, X Hall of Flame

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.