Ethereum on-chain signals suggest a major price surge.

Ethereum Price Analysis: Signs Point to a Major Price Surge

Ethereum (ETH) experienced a significant downturn on Monday, August 5, with a steep 23% drop in its price. This brought the price of Ethereum down to $2,120, a level last seen in 2023. However, the cryptocurrency quickly bounced back, raising speculation that the worst may be over.

Ethereum On-Chain Signals Indicate a Potential Upward Trend

Looking at on-chain data, Ethereum’s Market Capitalization and Realized Value (MVRV) ZZ score dropped to 0.52. This metric helps determine if a cryptocurrency is undervalued or overvalued compared to its fair value. Historically, when the MVRV Z-score surpasses 2.20, it usually indicates that prices are nearing cycle highs. For instance, in 2021, when Ethereum reached $4,819, the indicator peaked at 3.35.

However, following this peak, the price of Ethereum plummeted to $2,440. In March, with Ethereum trading around $4,067, the MVRV Z-score hit 2.34. Since then, Ethereum has struggled to break the $4,000 mark.

Looking at the current MVRV Z-score compared to November 2023 levels, it appears that Ethereum may have bottomed out. During this period, Ethereum surged from $1,959 to over $4,000 in just four months. Should history repeat itself, Ethereum’s price could potentially increase by over 100% by the end of the year.

Another significant indicator supporting a potential price surge is the STH-NUPL, which measures net unrealized gains and losses for short-term holders. This metric is currently showing signs of fear in the market, indicating a potential reversal in Ethereum’s price trajectory.

Ethereum Price Prediction: A 100% Increase by Year-End?

Technical indicators also suggest a possible recovery for Ethereum, mirroring its performance in Q1 of 2024. Following a correction between January 12 and 26, Ethereum experienced a notable rebound on January 27, gaining 7% within 24 hours.

Support was established around $2,220 shortly after, contributing to Ethereum’s strong performance throughout the year. Observations of the Relative Strength Index (RSI) show that Ethereum was nearing oversold levels before the January recovery. An RSI value below 30 indicates oversold conditions, which could lead to a significant bounce-back.

If the current buying trend continues, Ethereum could retest $2,871 in the near term. Further upside potential could see Ethereum reaching $4,094 in the coming months. However, this prediction hinges on the ability of bulls to sustain the current momentum in the market.