Author: Ciaran Lyons, CoinTelegraph; Compiled by Wuzhu, Golden Finance
A key metric used to determine whether Ethereum is overvalued has been “heating up” relative to Bitcoin — although one analyst believes the asset may not yet have entered overbought territory.
Ki Young Ju, CEO of cryptocurrency analytics firm CryptoQuant, noted that while Ethereum’s market value realized (MVRV) is rising rapidly, so too are transaction volume and active addresses on the Ethereum network.
“ETH MVRV is rising faster than BTC MVRV, indicating that ETH markets are heating up relative to its on-chain fundamentals,” Ju wrote in an X post on June 19.
MVRV indicates whether an asset is trading above or below its fair price, which is essentially the difference between what a user paid for an asset and the current market price.
According to data from Santiment, Ethereum’s MVRV has risen 29.9% to 91.43% compared to Bitcoin over the past 30 days, while Bitcoin’s MVRV has gone the other way, falling 10.8% to 127.41% over the same period.
Ethereum MVRV ratio chart. Source: Santiment
A high MVRV means that Ethereum’s market value is higher than its actual value - indicating that it is overvalued, which could raise concerns about a potential sell-off in the future.
When it falls, it indicates that the market is cooling down and the price may be approaching its fair value.
However, Ju said that with the spot Ethereum ETF expected to begin trading soon, the high MVRV is unlikely to scare off investors.
“Given the current ETF situation, this may be an ETH-only season,” Ju added, referring to the timeline for ETF trading, with SEC Chairman Gary Gensler reportedly saying ETF trading will begin “this summer,” while ETF analyst Eric Balchunas said it could start as early as July 2.
Anonymous crypto analyst Yoddha pointed out Ethereum's current price position on the chart and pointed out that there has been a slight consolidation - a signal of a bullish reversal from the bottom of the downtrend.
“Ethereum’s price has held up pretty well and looks ready for a crazy rally,” anonymous crypto analyst Yoddha wrote on June 19.
“Ethereum will be over $10,000 before the end of the year.Mark my words,” Yoddha added.
As of the time of publishing, Ethereum is trading at $3,556, according to CoinMarketCap.
Ethereum has gained 14.81% in the past 30 days. Source: CoinMarketCap
On June 18, Ethereum climbed back above the key $3,500 mark, up 1.37%, after Consensys announced that the U.S. Securities and Exchange Commission (SEC) had ended its investigation into whether ETH qualifies as a security.
Ethereum’s dominance in the cryptocurrency market has also grown significantly, up 6.62% in the past seven days, according to TradingView. Meanwhile, Bitcoin’s dominance has slightly decreased over the same period, to 0.23%.
As of the time of publication, Ethereum’s dominance is 18.8%, while Bitcoin’s dominance is 55.31%.
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