While some take losses in the market, others are looking for new Ethereum entries
- What is a “low risk buying zone?”
- What does the indicator show for Ethereum
While some traders suffer losses as a result of the crypto market declines, market participants who have not yet taken a position are now able to enter as long as assets remain in the opportunity zone, according to market data provided by Health.
What is a “low risk buying zone?”
First of all, every transaction in the cryptocurrency market is a risk because the industry is too volatile and exposed to regulation and manipulation. But in some cases, the market offers more pleasant entry conditions, compared to periods of asset caps.
The risk of the buy or sell area is determined by the MVRV ratio, which is calculated by dividing the total market value of an asset by its realized value. The indicator shows whether an asset is “overbought” or if it is trading at a discount.
What does the indicator show for Ethereum
According to the data provided by the indicator, for the first time in nearly two months, Ethereum has entered the “discount zone,” which means it may be less risky to enter the market now.
But the information provided can be introduced in different ways. MVRV ratio, like any other indicator, can be used with different parameters and in this case the indicator is set to show the state of the market on the basis of short term data.
?? #Ethereum has experienced a price drop of about -15% since it hit $ 4,878 #AllTimeHigh Last week. Our latest sneak peek reveals where $ ETHthe health of the market, what its rising address business and lower costs mean, and more. https://t.co/25m37cYjA4 pic.twitter.com/I725S1KRYZ
– Santiment (@santimentfeed) November 18, 2021
The long-term version of the same indicator shows that Ethereum’s market value is still overstretched and to enter the ‘low risk’ zone it needs to be corrected by an additional 40%.
At the time of going to press, Ethereum is trading at $ 4,236 while remaining within the 10% correction that began on November 12. If Ethereum hit another 40% correction, the second largest cryptocurrency would trade at around $ 2,500.