When Will Ethereum Turn Overheated? Report Says Watch This Level

[Ben Graham]

A new report from Glassnode has revealed a historically significant Ethereum level that could mark the start of an overheated phase if breached.

Ethereum Is Moving Towards Active Realized Price

In its latest weekly report, the on-chain analytics firm Glassnode has talked about some valuation models for Ethereum. The models in question are the Realized Price, True Market Mean, and Active Realized Price.

The first of these, the Realized Price, refers to the average cost basis or acquisition price of all tokens of the cryptocurrency that are currently part of the circulating supply.

The other two models, the True Market Mean and Active Realized Price, also aim to find the network cost basis, but both of these exclude for the long-dormant coins. Such tokens are likely to be lost due to missing wallets keys, so they aren’t part of the economic supply. Thus, these models may provide for a more accurate measure of the market situation than the Realized Price.

Now, here is a chart that shows the trend in the three on-chain pricing models for Ethereum over the last few years:

As displayed in the above graph, the Ethereum Realized Price, True Market Mean, and Active Investor Price are situated around $2,100, $2,500, and $3,000, respectively. This means that at ETH’s current spot value, all models agree that the holders as a whole are in the green.

But now that the asset has escaped above these lines, what could be next? “In order to gauge upside targets for this ETH rally, we can turn to the +1 standard deviation band of Ethereum’s Active Realized Price,” notes Glassnode.

The +1 standard deviation (SD) band of the indicator happens to be where selling pressure has intensified in the past. The reason behind the trend may lie in the fact that investor profits become significant beyond this boundary, so mass selloffs with the purpose of profit-taking can become more likely to take place.

Below is a chart that shows where this level currently lies for ETH.

From the graph, it’s visible that the Ethereum Active Realized Price +1 SD is located at $4,500 today. ETH is currently still at a distance from the level, but if its recent bullish push continues, it might end up retesting it.

In the current cycle so far, ETH has tested the boundary once, in March 2024. Back then, the cryptocurrency found rejection at it. In the 2021 bull run, the coin was able to surge past it, but in doing so, it kicked off the unsustainable euphoria market phase.

“As such, $4,500 can be identified as a critical level to watch on the upside, especially if Ethereum’s uptrend continues and speculative froth builds further,” explains the analytics firm.

ETH Price

At the time of writing, Ethereum is floating around $3,600, up almost 7% in the last seven days.