Ethereum's Rapid MVRV Rise Sparks Overvaluation Debate; Analyst Predicts ETH at $10,000 by Year-End
Summary:
Ethereum's Market Value to Realized Value (MVRV) index is rapidly increasing compared to Bitcoin's, leading to speculation about overvaluation. However, analysts reflect that the imminent trading of Ether ETFs and overall market trends suggest Ether may not yet be overpriced. Despite a high MVRV indicating an overvalued state, Ethereum continues to hold its ground. An anonymous crypto analyst, Yoddha, predicts Ether will surpass $10,000 before year-end. Ethereum's dominance in the crypto market is also on the rise, contrasting with a minor drop in Bitcoin's market supremacy.
The valuation key index of Ether (ETH) reflects a rapid rise compared to Bitcoin (BTC), leading some to question whether the asset is overpriced. However, an analyst counters that the digital currency may not yet be in an overvalued situation. Ki Young Ju, CEO of CryptoQuant, acknowledges that as Ethereum's Market Value Realized Value (MVRV) accelerates, so does its transaction volume and active addresses network. According to Ju’s report on June 19, the swift increase of ETH MVRV as compared to BTC indicates that the Ether market is trending upwards compared to its intrinsic blockchain attributes.
The MVRV helps identify when a digital asset is trading above or below its fair value, essentially measuring the variation between the price at which users acquired the asset and its present market price. They drew a comparison with Bitcoin over the last month, they found that Ethereum's MVRV has surged 29.9% to hit 91.43%, whilst Bitcoin's MVRV has decreased by 10.8% to stand at 127.41% for the same duration. This insight came from Santiment data.
When the MVRV is at its peak, it implies that the market value of Ether is higher than its intrinsic (realized) value. The fear is that this valuation might trigger a potential future sell-off. A drop in MVRV suggests cooling of the market, with its price possibly nearing its fair value.
Despite this, Ju believes that with the imminent trading of spot Ether ETFs, high MVRV should not deter investors. "It might turn out to be an ETH exclusive period," suggested Ju, highlighting the launch of ETF trading, projected to start this summer.
Anonymous crypto analyst Yoddha gave an optimistic estimate pointing to Ether's current configuration on the chart and a possible surge. Yoddha predicted that the price will exceed $10,000 before the year closes.
At the time of publishing, Ether was trading at $3,556. It has gained 14.81% over the past 30 days. On June 18, it peaked over the vital $3,500 mark, an increase of 1.37%, after the US Securities and Exchange Commission (SEC) terminated their investigation into whether ETH qualifies as a security.
Ether's dominance in the cryptocurrency market is noticeably increasing, growing 6.62% in the past week, whereas Bitcoin's market dominance has dropped 0.23% over the same period. At publication time, Ethereum's dominance stood at 18.8%, whereas Bitcoin's was 55.31%.
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Published At
6/20/2024 6:50:27 AM
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