After maintaining around the $3,900 zone for the past two weeks, Ethereum (ETH) was expected to soon break through the $4,000 mark to create an opportunity to establish a new peak. However, strong selling pressure unexpectedly halted this 'almost certain' scenario temporarily.
Unexpected Correction
On August 1st, the price of ETH at one point fell below $3,500, marking a sharp decline compared to the previous accumulation zone. However, on-chain data shows that the 'king of altcoins' still has room to recover and break out again.
Understanding MVRV – On-chain Valuation Indicator
MVRV (Market Value to Realized Value) is the ratio comparing the market value and the actual value of an asset.
MVRV > 3.7: The asset is in a high valuation zone, at risk of correction.
MVRV < 1: Undervalued asset with high potential for price increase.
According to data from CryptoQuant, the MVRV indicator of ETH has just rejected a long-term resistance zone – explaining the current profit-taking pressure. This was also the zone that marked a strong market correction in 2018.
7-Year Breakthrough Opportunity
Notably, ETH is currently receiving a strong influx of capital from spot ETFs in the US. Just in the past few weeks, these funds have recorded a record capital flow, reflecting strong interest from institutional investors.
If the MVRV indicator continues to stay above the 365-day moving average (SMA 365), this will be a signal reinforcing the medium-term bullish trend. This opens up the possibility for ETH not only to recover above $4,000 but also to target higher price zones, even breaking historical highs.
Conclusion
Although the recent correction to $3,500 has shaken market sentiment, on-chain signals are still leaning towards a bullish scenario. With support from institutional money flow and a supportive technical structure, Ethereum could soon return to the race and conquer new price milestones in the near future.