Is It Time To Buy Ethereum? This On-Chain Pricing Metric Suggests So

The price of Ethereum continues to struggle in the month of April, as it barely holds above the $1,600 level over this weekend. Despite its underwhelming performance, several investors are still keeping an eye out for the second-largest cryptocurrency by market cap. As such, a popular crypto trader on the social media platform X postulated that it might be time to buy the Ethereum token again.

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Has ETH Price Reached A Bottom?

In an April 19 post on X, prominent crypto analyst Ali Martinez revealed that Ethereum has hit a crucial on-chain level, which could be bullish for the price. This on-chain observation revolves around the Market Value to Realized Value (MVRV) Pricing Bands, which are based on a set of MVRV values that typically describe the extremes of the market cycles.

The MVRV (Market Value to Realized Value) ratio is an indicator that tracks the ratio between a coin’s market cap and its realized cap. When the value of this ratio is greater than 1, it implies that more investors are considered to be in profit at the moment.

Typically, the MVRV ratio offers insight into how the value the investors hold (the market cap) measures against the value they put in (the realized cap). Meanwhile, the pricing bands help to estimate the extremes of a coin’s market cycle, where high levels indicate extreme unrealized profit and low levels signal extreme unrealized loss.

For context, a high MVRV value is considered a price top signal, as traders are usually more likely to offload their assets when they are in the green. Meanwhile, when the MVRV ratio is low, it implies that the market cycle has reached a bottom.

Source: @ali_charts on X

The blue pricing band represents extremely low levels, where the MVRV has been below 0.8 for around 5% of trading days. Meanwhile, the red pricing band marks extremely high levels, with the MVRV value trending above the 2.4 mark for around 6% of the trading days.

As shown in the chart above, the price of Ethereum has dropped beneath the blue pricing band in the past few days. Historically, whenever the price of ETH falls to this extremely low level, it means that the altcoin has bottomed out and might be gearing up for a trend reversal.

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Ethereum Price At A Glance

As of this writing, the price of ETH sits just above $1,610, reflecting 1.4% increase in the past 24 hours. According to data from CoinGecko, the altcoin is down by 2% in the past seven days.

The price of ETH on the daily timeframe | Source: ETHUSDT chart on TradingView

Featured image from iStock, chart from TradingView

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