Amid a strong rally in the broader cryptocurrency market, the world’s second-largest cryptocurrency Ethereum (ETH) is up more than 10% in the past 24 hours to above $2,100. This comes with the successful implementation of the Shanghai hardfork with the Ethereum blockchain continuing to show strength and stability.
It is the first time since August 2022 that the price of Ethereum has shot past $2,000. With ETH price extending weekly gains to over 12%, investors are wondering what to do next. To understand this, let’s discuss both: the bear and bull case scenario for Ethereum.
The Bear Case Scenario for Ethereum
On-chain data provider Santiment pointed to the popular MVRV ratio (Market Value/Realized Value). It notes that an MVRV score of 15% or more is a warning sign indicating the likelihood of a correction. Currently, the MVRV score for Ethereum (ETH) is 9.95%. While an MVRV score above 0 indicates risk of a fall, the current score is not something to be of great concern.
But on the other hand, the 365-day MVRV score stands at 29%, which is at the highest level since December 2021.
Courtesy: Santiment
On the other hand, there is a strong spike in the profit to loss transaction ratio for Ethereum (ETH). The Santiment report notes:
There are 2.59 times as many trades in profit versus trades in loss today. And this is the highest ratio since January 20, when we did see a small correction follow. We do interpret this as a short-term bearish signal, as this heavy profit-taking may historically depress prices temporarily.
Courtesy: Santiment
Looking at the shark and whale addresses, i.e. addresses with anywhere from 10 to 100,000 ETH, shows that the amount of ETH held by this cohort has decreased over the past month, which is a bit disappointing and shows signs of bearishness.
The Bull Case Scenario for Ethereum (ETH)
The total amount of Ethereum remaining on the exchanges has continued to decline. On the other hand, total ETH in staking has also skyrocketed. Popular crypto analyst Lark Davis notes:
Ethereum on exchanges 18.05 million Ethereum stake 18.15 million Currently 16% of ETH is staked, a low number compared to others such as SOL or ADA. If ETH strike doubles to 32%, EVERY SINGLE ETH must be bought on exchanges. BULLY! ! !
As Ethereum performed the Shanghai upgrade, some investors began to unpeg their ETH. This is especially true for exchanges like Kraken, which recently faced an SEC lawsuit and a $30 million fine for offering staking service. But Lark Davis explains that ETH deposits, on the other hand, have grown significantly.
Some people do indeed cash out their Ethereum (a lot of it is Kraken, thanks SEC), but look at all the incoming deposits! pic.twitter.com/LzJ1FEtcVI
— Lark Davis (@TheCryptoLark) April 13, 2023
Bhushan is a FinTech enthusiast and has a good flair for understanding financial markets. His interest in economics and finance draws his attention to the new emerging Blockchain Technology and Cryptocurrency markets. He is constantly in a learning process and keeps himself motivated by sharing his acquired knowledge. In his spare time he reads thriller fiction novels and sometimes explores his culinary skills.
The content presented may contain the personal opinion of the author and is subject to market conditions. Do your market research before investing in cryptocurrencies. The author or publication is not responsible for your personal financial loss.
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