A new report from Blockchain analytics firm Santiment finds that Ethereum ETH/USDthe second largest cryptocurrency in the world by market capitalization, could be threatened with an imminent price drop.
What happened: Ethereum, along with the rest of the crypto market, has seen a steep drop since the start of the year. The price of ETH fell from a high of $3,836.16 on January 2 to a price of $2,632.51 on Sunday, a drop of more than 30%.
Santiment notes that ETH’s market value to realized value (MVRV) over a seven-day period has increased and has now reached a level that could lead to profit taking and further price declines.
“ETH’s 7D MVRV, which measures holders’ short-term profit/loss, shows that we have entered the danger zone and reached the top over the past three months, which historically has seen holders in the short term that are well in profit…. off the table,” reports Santiment.
Also Read: Why Ethereum’s Chart is Starting to Look a Bit Scary
Upside potential: While a high MVRV value indicates an increased risk of investors liquidating their assets for gains, Ethereum’s price decline could set the stage for a future upside, according to Santiment.
“A drop in price and MVRV in the coming days would contribute to a good reset and a good opportunity,” the report said.
In terms of price action, Santiment says traders should remain cautious, especially if Ethereum is unable to recover a key level. “Bulls hope better than resistance around $3100-$3200 [range] breaks to set a higher high for further pursuit,” the analytics firm explains. “Going back to $2,000 wouldn’t be pretty.”
On Sunday afternoon, Ethereum was trading at $2,627.00 down 1.35% in the past 24 hours.