Summary
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On-Chain Metric Suggests Undervaluation: According to crypto analyst Ali Martinez, the Entity-Adjusted Dormancy Flow for Ethereum has fallen below one million, historically signaling that ETH may be undervalued in the market.
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“Macro Bottom Zone” Indicator: This Dormancy Flow level suggests Ethereum could be in a “macro bottom zone,” implying a potential market low and reduced selling pressure from long-term holders.
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Dormancy Flow Defined: The Entity-Adjusted Dormancy Flow, as explained by Glassnode, is a ratio comparing market cap to annualized dormancy value, helping assess bullish or bearish trends and identify market lows.
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Large Exchange Outflows: The article highlights significant Ethereum withdrawals from exchanges (453,000 ETH in five days), a potentially bullish signal indicating accumulation by large investors.
According to a prominent cryptocurrency analyst, Ethereum (ETH), a leading platform for smart contracts, may currently trade below its intrinsic value. This assessment comes from insights derived from an on-chain metric.
Analyst Highlights Key On-Chain Metric
Crypto expert Ali Martinez, who shares his analyses with a considerable following of over 135,000 on the social media platform X, highlights that Ethereum’s Entity-Adjusted Dormancy Flow has recently dipped below the one million mark.
He suggests this movement could indicate Ethereum is establishing a significant low point in its market cycle.
Dormancy Flow Signals “Macro Bottom Zone”
According to Martinez, this historical pattern implies a “macro bottom zone.”
This zone typically suggests ETH’s present valuation may be below its actual worth and that investors with a long-term outlook are showing reduced eagerness to liquidate their holdings.
This reading of the indicator also implies that ETH might be in a phase where substantial market lows are forming.
Understanding Entity-Adjusted Dormancy Flow
The crypto analytics firm Glassnode elucidates that the Entity-Adjusted Dormancy Flow metric is utilized “to pinpoint market troughs and ascertain if the prevailing bull market conditions are within typical parameters.“
This metric is defined by Glassnode as a tool to discern whether an asset is in a primary bullish or bearish phase.
It is calculated by determining the ratio between a cryptocurrency’s market capitalization and its annualized dormancy value, expressed in US dollars.
Exchange Outflows Reinforce Bullish Sentiment
Martinez further points out a substantial outflow of Ethereum from cryptocurrency exchanges, with 453,000 ETH removed in the preceding five days alone.
A significant reduction in ETH balances on exchanges is often considered a positive signal.
Such withdrawals can imply accumulation by major investors, who typically move assets to cold storage or decentralized wallets rather than keeping them readily available for trading on exchanges.
Current ETH Market Price
Currently, Ethereum is trading at $1,558, reflecting a modest increase of over 2% in its value over the last day.
Also Read: Ethereum Price Nears $2,000 Stablecoin Activity Peaks
Ethereum’s price is predicted to break through the $2,000 barrier due to a record surge in stablecoin activity on its network. This growth is fueled by enhanced scalability through Layer-2 solutions, making Ethereum more affordable and attractive for DeFi applications. Stablecoin transactions on Ethereum have reached an all-time high of $1.18 trillion, surpassing competitors and indicating strong investor confidence. This booming stablecoin usage will positively impact Ethereum’s price and underscore its dominant position in the DeFi ecosystem. Ethereum’s positive outlook is further supported by decreasing ETH reserves on exchanges, a vibrant developer community, and the upcoming Pectra upgrade. These factors contribute to potential supply scarcity and ongoing network improvements, reinforcing bullish predictions and a path toward higher valuations. Ethereum currently dominates the stablecoin landscape, with…[Read More]
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