ETH is in the “opportunity zone” – what does that mean?
After a sudden 10% increase in the ETH price, Santiment provided some interesting on-chain and market metrics that show the asset is within an “opportunity zone”.
ETH MVRV indicator
Opportunity and Sell Zones are determined by the MVRV Index, which is the ratio between the total market value of the asset and its actual value. With the help of the indicator, traders can determine whether an asset is overbought or oversold.
???? #EtherThe price of ‘has shot up + 9.2% in just 3 hours, and’#bloodinthestreets‘Metrics like the 30 day MVRV showed great pain for the trader and #FUD from $ ETH #hodler. Generally, when this metric drops below -10 to -15%, prices begin to turn positive. https://t.co/p51IybOgdI pic.twitter.com/WTUZ2nZREv
– Santiment (@santimentfeed) December 15, 2021
While every transaction in the cryptocurrency market carries some risk, indicators like the MVRV show the current extent of the actual trend. Whenever large Ethereum holders sell their assets more aggressively than usual, the MVRV ratio tends to drop faster and determines whether there is room for recovery.
With the MVRV indicator currently hovering around -10%, Ethereum is being oversold by the main holders and is actually moving within the “opportunity zone” which, according to market history, is an accurate indicator of the local bottom.
While it can give traders an indication of a short-term trend reversal, this indicator is not designed to give a signal about the long-term market situation. Before climbing 10%, the index hit a four-month low. The last time the MVRV rate was near -10% was in early December.
At press time, Ethereum is trading at $ 4,038 with no difficulty breaking the expected $ 4,000 resistance. ETH has been moving within a short-term local downward trend since December 1st.
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