Metric analysis

The metric that indicates an additional 50% drawdown for Ethereum is possible

The past trend of Ethereum value captured by byte metric suggests that a 50% pullback from here is still possible for ETH.

Ethereum value captured per byte currently stands at $0.30, double previous Bear Bottoms

According to the latest data published by glass knotETH may still have an additional 50% downside potential in price.

The “value per byte” is an indicator that measures the total value stored by Ethereum in a single byte of the blockchain.

The metric was first invented by Permabull Ninoand its main purpose is to model the evolution of the efficiency of value capture to data from a blockchain over time.

When the value of this indicator is high, it means that the crypto is capturing a large amount of value relative to a small data footprint at the moment.

Related Reading | Ethereum Hashrate Plunges Over 10% As Mining Profitability Falls

Such a value may imply that the blockchain is very efficient at the moment. On the other hand, a low value stored per byte suggests low efficiency.

Now, here is a graph that shows the trend of Ethereum value captured per byte over the past few years:

Looks like the value of the indicator has declined in recent weeks | Source: Glassnode

In the graph above, the red, blue, and green lines indicate $5 per byte, $1 per byte, and $0.15 per byte respectively.

Historically, Ethereum has formed bear market lows when the network has captured a value of $0.15 per byte.

Similarly, when the indicator had a value of around $5 per byte, the cipher peaked (however, not all peaks occurred around this value).

More recently, the value of the metric has dropped and the ETH blockchain now stores around $0.30 per byte.

Related Reading | How This Ethereum Lending Platform Was Attacked And Made A Deal With The Hacker

Obviously, the indicator is currently double the net $0.15 that the coin seems to have tracked historically.

This may suggest that Ethereum could still have room for up to 50% more decline before the bear bottom is finally reached.

However, the Glassnode report notes that this only assumes that there is no fundamental improvement in the network’s capture of value.

The Ethereum environment today is quite different from that of a few years ago; NFT, DeFi and other modern infrastructure did not exist back then.

So, due to these factors, it is possible that the reference value stored by the network is now higher, suggesting that a bottom could take place at a higher point than in the past.

ETH price

As of this writing, the price of Ethereum is hovering around $1.1k, up 1% in the past week.

Ethereum Price Chart

The price has mostly moved sideways over the last few days | Source: ETHUSD on TradingView
Featured image from Unsplash.com, charts from TradingView.com, Glassnode.com