- According to on-chain data, Ethereum is not yet in a dangerous zone.
- The doubts of ETH investors could accelerate the rally even further.
- Ether Capital CEO Brian Mosoff believes that the rise will continue in the long term.
As Ethereum continues to rise, what do on-chain data say? Will there be continuity in the rally? Details in our article…
Important Data for the Ethereum Rally!
Ethereum and the crypto market seem ready to expand the rally by showing an upward trend last week. The cryptocurrency underwent a major update called “Shanghai,” which allowed ETH locked in the Proof-of-Stake (PoS) blockchain called “Beacon Chain” to be released.
Contrary to some expectations, the update failed to lower Ethereum’s price. At the time of writing, the cryptocurrency reached an eight-month high above $2,000 for the first time in 2023 and could potentially reach the next resistance zone.
ETH/USDT Daily Price Chart
Traders’ Doubts Can Fuel the Rally!
Research firm Santiment’s latest data indicates a potential decline for Ethereum. Although the cryptocurrency has been in a bull market since the beginning of 2023, it now shows signs of a potential decline.
The firm looked at ETH’s 30-day Market Value Realized Value (MVRV) ratio, and according to updated data, this ratio is currently at 9.95%. As seen in the chart below, when this indicator reaches around 15% or higher, it will have entered a dangerous zone.
ETH 30-day MRVR
In other words, Ethereum can still make some short-term profits. However, Santiment warned:
“The fact that this MVRV is still above 0 indicates that the risk of a decline is higher. However, we are not at a level where we need to be overly concerned at the moment.”
“Long-term, the 365-day MVRV is at 29, which is the highest level since December 27, 2021. This is a bigger concern, such as traders making big profits and being exposed to little pain for prices to rise.”
Another positive sign for ETH in the short term is the funding rates in the derivatives sector. Santiment examined the futures and options trading platform Deribit and found negative funding rates, indicating that traders do not have much confidence in the current rally.
The chart below shows that ETH’s price is negatively correlated with funding rates. In other words, if the funding rate is negative, as it is now, meaning that traders have sold the cryptocurrency short, the price tends to trend upward. The research firm stated:
“We are actually seeing quite a bit of skepticism right now. Short selling is quite common, which is a good sign that more liquidations need to be added for prices to rise.”
The negative funding rate signals skepticism and more gains for ETH among traders.
Ethereum’s Long-Term Price
Although activity technically allows ETH holders to provide liquidity to the market, most people hold their cryptocurrencies at a loss. Therefore, there is not much incentive for ETH holders to sell right now. Additionally, as Ether Capital CEO Brian Mosoff stated in our exclusive interview, people staking Ethereum are long-term bullholders, not speculators.
Regarding Shanghai’s likelihood of bringing ETH back to support levels, Mosoff said the following and emphasized the long-term bull scenario:
“I think this is just temporary noise and will go away, even if there is short-term selling, the price will recover very quickly because people see the best smart contract platform and the opportunity to generate returns. This is a very strong value proposition.”
