After the recent increases in the price of Ethereum (ETH), the largest altcoin in terms of market capitalization, Santiment stated that the cryptocurrency entered an “zone of opportunity” and supported this with the metrics it shared.
Opportunity and sales regions are determined by the MVRV indicator, which is the ratio of an asset’s total market value to its realized value. With the help of the indicator, traders can identify whether an asset is in overbought or oversold territory.
While there is some risk in every signal in the cryptocurrency market, indicators like MVRV show the current degree of true trend. When large Ethereum holders sell their holdings more aggressively than usual, the MVRV rate tends to drop faster. This determines whether there is room for recovery.
Is Ethereum in the Opportunity Zone?
According to the MVRV indicator, which is currently moving around -10%, Ethereum is oversold by major investors and is actually moving in the “opportunity zone”, which is an accurate indicator of the local bottom according to the history of the market.
While the ratio may give traders a hint of a short-term trend reversal, the indicator does not give any signal about the long-term state of the market. Before the 10% increase, the indicator hit a four-month low. The last period when the MVRV rate was close to -10% was at the beginning of December.
Ethereum is trading above the key $4,000 level today and according to the chart’s data, ETH has been moving in a short-term local downtrend since Dec.