Venturefounder, an analyst at blockchain data provider CryptoQuant, has shared an insight on how ETH’s price might forge ahead, drawing inferences from three on-chain valuation indicators.
A few $ETH valuation on-chain indicators:
1) #MVRV Z-Score is a standard deviation that pulls out the extremes of price and realized value. The higher Z = more overvaluation, vice versa
ETH Z-score still in the green zone, but in the last cycle, ETH remained here for 1.5 years pic.twitter.com/PQ3eldSSsr
— venturefoundΞr (@venturefounder) December 12, 2022
First, consider the ETH MVRV Z score, which is a standard deviation that emphasizes the price and realized value extremes. The greater the Z, the greater the overvaluation, and vice versa. Second, ETH NUPL, or net unrealized profit and loss, is the difference between market cap and realized cap divided by market cap. Third is the ETH percentage supply in profit.
According to him, the ETH Z-score remains in the green zone; however, in the last cycle, ETH maintained this status for one year and six months.
Based on the ETH NUPL, the indicator remains in the capitulation zone. However, Ethereum has spent less time than it did in the previous cycle, with only three months since the bear market began.
While ETH’s percentage supply in profit recently hit a new low of 40%, this is still below the less than 30% recorded in 2018 and March 2020. In addition, unlike the previous cycle, Ethereum’s price has remained in a range since June 2022 rather than trending downward. At around $4,900, the market has reached a year since the cycle’s top.
JPMorgan predicts big catalyst for ETH price
The Ethereum Merge update occurred in mid-September and ushered in a transition to a proof-of-stake mechanism for the second largest cryptocurrency. JP Morgan’s analysts believe this, and an upcoming upgrade might be a catalyst for the ETH price.
“We believe that the Ethereum Merge and really the Ethereum Surge could be a big factor in terms of increasing the use-cases for blockchain into new areas, including financial services.”
The Surge, an upcoming upgrade, hopes to reduce costs and make the ETH network safer and faster.
“We continue to see the Ethereum Surge as a catalyst for development in the cryptocurrency markets, which appears at least 6-12 months away,” JP Morgan analysts stated.