Ethereum Realized Cap, which faced a notable decline from August to November, hit a new all-time high of $243.45 billion, according to Glassnode data. This development comes as ETH price rises to $3,800.
Based on historical data, a rising realized cap is a sign of a bullish trend. Therefore, this milestone could pose a problem for traders who are bearish on Ethereum price trends.
Ethereum remains undervalued amidst recent milestones
Ethereum’s Realization Cap, a key on-chain indicator, has shown a notable increase, suggesting the potential for significant price appreciation. This indicator takes into account the last price each coin moved and helps identify market highs and lows.
An increase in Realized Cap indicates that the coin last moved at a lower price and is being used, suggesting that ETH is being repriced higher. On the other hand, a decrease in the realized cap reflects spending at a higher price, indicating a possible decline.
Therefore, the rise in Ethereum's realization cap signals an increase in confidence among holders and a repricing of the value of ETH. Moreover, if this trend remains the same, it would be consistent with historical patterns that preceded significant price increases.
Ethereum enablement cap. Source: Glassnode
In addition to the above metrics, the long/short difference between Ethereum’s market value and realized value (MVRV) is also consistent with theory. As the name suggests, the MVRV long/short difference indicates whether long-term holders have more unrealized gains in current value or short-term holders.
If the indicator is negative, it means that short-term holders have an advantage. In most cases, this is bearish on price. However, according to Santiment, Ethereum’s MVRV long/short differential has risen to the positive zone of 5.67%, indicating that the trend is bullish and the cryptocurrency is undervalued.
The last time the cryptocurrency followed such a trend, ETH bears took the brunt as the price climbed towards $4,100. Therefore, if this trend continues, Ethereum's value could rise in the short term.
Ethereum MVRV long/short difference. Source: Santiment
ETH Price Prediction: Approaching $4,200
Evaluating the daily chart of ETH/USD, we can see that the cryptocurrency is following a similar trend to its yearly high in June. During this period, the price of Ethereum initially fell from $2,770 to $2,200, but rose above $4,000 a few months later.
From October to the first week of November, ETH declined from $2,700 to $2,300 before the recent rally. The Relative Strength Index (RSI), which measures momentum, follows the same pattern.
If this trend continues, ETH could rise to $4,200 in the short term. If the bulls sustain this move, the cryptocurrency could rise to $4,500.
Ethereum daily analysis. Source: TradingView
However, if the Ethereum realization cap lowers and buying pressure eases, this trend could change and the price could fall below $3,500.
Disclaimer
In accordance with Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. Although BeInCrypto strives for accurate and unbiased reporting, market conditions are subject to change without notice. Always do your own research and consult a professional before making any financial decisions. Please note that our Terms of Use, Privacy Policy and Disclaimer have been updated.
