Ethereum (ETH) has entered the “danger zone” according to Santiment

On-chain analytics platform Santiment is warning investors that Ethereum (ETH) is at risk of falling further based on a key metric.

In a new report from the platform called Based on the 7-day market value to realized value (MVRV) of ETH, the second largest cryptocurrency by market cap is currently in the “danger zone”.

“ETH’s MVRV 7D, which measures short-term profit/loss for holders, shows that ETH has entered a dangerous zone as the indicator hits a three-month high that has short-term holders sold off sharply.”

MVRV 7D of ETH | Source: Santiment

MVRV is the ratio between the market cap and the actual capitalization of a coin. An increased MVRV value indicates a high paper yield and thus an investor’s ability to liquidate his assets profitably.

On the other hand, a low MVRV indicates a low paper yield and is an indication that an asset is undervalued or in low demand.

According to Santiment, a decline in Ethereum’s price and MVRV could be a good thing for the second-largest cryptocurrency.

“Price and MVRV declines in the coming days should contribute to the price pullback and create a good opportunity for investors.”

Santiment also cautioned that Ethereum’s price action is showing a bearish signal, saying that bulls need to strengthen to avoid a potential sell-off.

“After making a deep low in January 2022, ETH made a higher low in February. The bulls need to break out of the $3100-$3200 resistance area to set a higher high and continue the uptrend. .

Otherwise, the price will see a big sell-off below $2,000.”

Source: Santiment

Ethereum is trading at $2,661 at press time.

You can see the ETH price here.

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Disclaimer: This article is for informational purposes only, not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.

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