Ethereum falls under MVRV band that marked the last 3 bottoms

[Ben Graham]

On-chain data shows Ethereum dipped under a key Market Value to Realized Value (MVRV) pricing band during the latest price drawdown.

Ethereum Fell Under The 0.80 MVRV Band Recently

As explained by analyst Ali Martinez in an X post, Ethereum recently dropped below the 0.80 MVRV pricing band. The “MVRV Ratio” is a popular on-chain indicator that tracks the ratio between the ETH market cap and Realized Cap.

The Realized Cap here refers to a capitalization model that calculates the asset’s total value by assuming that the value of each individual token is equal to the spot price at which it was last transacted on the blockchain.

The last transfer of any token is likely to represent the last time that it changed hands, so the price at its time could be considered as its current cost basis. As such, the Realized Cap essentially measures the sum of the acquisition value of all coins in circulation. In other words, it provides an estimate for the amount of capital that the investors as a whole have put into the cryptocurrency.

As the market cap can be considered as the value that holders are carrying in the present, its comparison with the Realized Cap in the MVRV Ratio tells us about the profit-loss status of the Ethereum userbase.

When the value of the MVRV Ratio is greater than 1, it means the investors are in a state of net unrealized profit. On the other hand, it being under this mark suggests the dominance of loss on the network. Historically, profitability swinging to an extreme value either side of 1 has often paved way for reversals in the asset.

At a high level above 1, this happens because investors become more likely to take their profits the higher that they get. Similarly, below 1, the asset can bottom out as losses dominate and selling pressure runs out.

The MVRV Pricing Bands is a model that defines price levels for ETH where these behaviors become more apparent. Below is the chart shared by Martinez that shows the trend in this model’s bands for Ethereum.

As is visible in the graph, Ethereum plunged below the 1.0 pricing band corresponding to $2,449 during its slide at the end of January. This means that the overall market went underwater due to the price drawdown.

With bearish momentum continuing in the first week of February, losses only grew deeper for investors as the asset fell below another pricing band: 0.80. Currently, this level is valued at $1,959.

“The last three times Ethereum $ETH dipped below the 0.80 Pricing Band, it marked a market bottom,” noted the analyst. It now remains to be seen whether the venture below the level would also mark a bottom for the asset this time.

ETH Price

Ethereum has rebounded a bit since its plunge last week as its price has returned to $2,044, recovering above the 0.80 MVRV pricing band.