Ethereum price has breached above the symmetrical triangle and is comfortably hovering above a stable support area with no signs of weakness. Despite the recent flash crash, the downside risk for ETH also seems to be capped due to a plethora of footholds. So, investors should not give up the smart contract token hitting significant psychological levels.
On-chain metrics reveal optimism?
Ethereum’s price crashed roughly 12% as Bitcoin took a U-turn on 6 March. This sudden downtrend caused a lot of altcoins to head south as well. However, for ETH the on-chain metrics are favoring a bullish outlook.
The most bullish index for the short-term outlook is the on-chain volume and its recent uptrend. This metric has been producing higher highs since 16 March and has risen from 17.19 billion to 24.25 billion on 7 April.
Despite the recent downturn in Ethereum’s price, the volume seems to be increasing. Thus, indicating that the market participants could be buying the dips.
Source: Santiment
The supply of ETH on exchanges seems to be declining steadily despite a minor uptick in February. Currently, the number of ETH held on centralized entities has hit 15.08 million, denoting a 6.1% decline or an outflow of nearly one million since 1 March.
This decline indicates that investors are growing confident in Ethereum and expecting a bullish performance from its price in the near future.
Source: Santiment
While the on-chain volume and supply on exchanges indicate that the investors are bullish, the 30-day Market Value to Realized Value (MVRV) mode reveals that a sell-off is less likely. This indicator is used to assess the average profit/loss of investors that purchased ETH tokens over the past month.
A value below -10% indicates that short-term holders are selling at a loss and is typically where long-term holders hop in to accumulate since the risk of a massive flash crash is near zero. Therefore, a value below -10% is often referred to as an “opportunity zone,” since the risk of a sell-off is less.
Although the 30-day MVRV reached 16% on 29 March, it has since dropped to near-zero. Thereby, indicating that short-term holders have been booking profits.
Source: Santiment
Therefore, these three on-chain metrics suggest that a bullish regime awaits Ethereum’s price and that the sell-off could be done for now.
