Ethereum’s “Secondary Bull Run” Is Here, Quant Explains Why

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As a seasoned researcher with years of experience in deciphering the intricacies of blockchain and cryptocurrencies, I find the current trend in Ethereum’s MVRV Ratio quite fascinating. The similarity between this cycle and the previous two is striking, and if history repeats itself, we might be in for a wild ride!

An analyst has clarified that, as per a commonly used on-chain signal, Ethereum is currently experiencing a secondary surge in its bull market cycle.

Ethereum MVRV Ratio Is Forming A Pattern Similar To Past Two Cycles

As a crypto investor, I recently came across an insightful analysis in a CryptoQuant Quicktake post regarding the recent trend in Ethereum’s Market Value to Realized Value (MVRV) Ratio. This “MVRV Ratio” is a valuable on-chain metric that compares the asset’s market capitalization with its realized capitalization, offering a useful perspective on whether investors are making a profit or experiencing a loss.

In simpler terms, the term “realized cap” in this context means a method used to determine Ethereum’s overall worth. This method assumes that the value of each Ether token is equivalent to the price at which it was last traded within the network.

Essentially, the model represents the accumulated purchase price of all tokens currently circulating, or in simpler terms, it’s a measure of the total capital invested by the investors in the asset. In other words, the MVRV Ratio indicator evaluates the current market value (the total worth that holders are holding now) against the original investment made.

If the market cap exceeds the realized cap (as indicated by a value greater than 1 for the metric), this indicates that overall, investors are experiencing net profits. Conversely, when the market cap is less than the realized cap (value under the threshold), it signifies that losses dominate the market.

Here’s the graph provided by the analyst demonstrating the evolution of the Ethereum MVRV Ratio over the past few years:

Looking at the graph before me, it’s clear that the Ethereum MVRV Ratio reached a fairly elevated point during the first three months of the year, coinciding with the price surge. However, as we entered a bearish consolidation phase after the rally, the indicator has cooled off significantly and has now returned to approximately the 1 neutral level.

As a crypto investor, I’ve noticed an exciting flip in the MVRV Ratio recently, pointing upward once more. Remarkably, this pattern is reminiscent of the last two bull markets, as indicated by the annotations on the chart.

It seems that both these runs had two distinct stages during which the Ethereum MVRV Ratio peaked at unusually high levels. There was a cooling-off period between these two phases.

If the ongoing pattern repeats itself, it’s possible that the initial rally at the start of the year was the beginning phase, and the latest rally might be the second phase in this sequence.

As a researcher observing the trends, I’ve noticed an interesting pattern in the past two market cycles: the secondary bull run has consistently propelled prices to significantly higher levels than the initial one. Given this observation, it’s plausible that Ethereum could surpass its earlier year highs for this cycle, if we are indeed witnessing a repeat of this pattern. However, it’s important to remember that these are predictions based on past trends and not guaranteed outcomes.

ETH price

At the time of writing, Ethereum is trading at around $3,600, up almost 8% over the past week.

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2024-11-29 09:41