On-chain analytics firm Santiment has reported that Ethereum continues to be undervalued, while both Bitcoin and XRP have entered a neutral phase in terms of their Market Value to Realized Value (MVRV) ratios. This analysis comes in the wake of a market recovery that has unfolded over the past day.
The MVRV Ratio serves as a pivotal on-chain metric, offering insights by juxtaposing an asset”s market capitalization against its Realized Cap. The Realized Cap reflects the total investment made by users within the network. In essence, the MVRV Ratio provides a snapshot of the average profit or loss experienced by investors across the blockchain spectrum.
A reading above 1 indicates that investors are generally in a state of unrealized gains, while a figure below this threshold points to a scenario where losses dominate. In this latest update, Santiment has zeroed in on the MVRV ratios for recent buyers over the past month, rather than the aggregated ratio for the entire network.
The analysis reveals a noteworthy uptick in the MVRV ratios for the top five cryptocurrencies, including Bitcoin, Ethereum, XRP, Cardano, and Chainlink. This increase is largely attributed to the recent price rally, with Bitcoin surpassing $68,000 and Ethereum climbing back over $2,000.
Despite the overall positive price movement, the MVRV ratios tell a more diverse story. Currently, Bitcoin is positioned at -1.4%, XRP at -0.1%, and Chainlink at +3.3%, indicating their presence in the neutral zone. Conversely, Ethereum stands out with an MVRV ratio of -5.5%, which places it just within the “mildly undervalued” category, despite a 6% price increase in the last 24 hours.
In stark contrast, Cardano has surged to an MVRV value of +6.8%, thereby entering the “mildly overvalued” zone. The implications of these MVRV readings are significant; as investor profits rise, the likelihood of profit-taking increases, which may lead to price corrections. Conversely, lower values suggest a heightened state of market distress, potentially paving the way for a bottom formation.
In light of these findings, Santiment advises that investors should consider buying or dollar-cost averaging when a cryptocurrency is identified as “undervalued” and exercise caution when an asset enters the “overvalued” territory.
Currently, Ethereum has seen fluctuating prices, briefly breaching the $2,100 mark before a slight retracement to $2,070.
