Ethereum Warning Is Revealed By Crypto Firm Santiment

The crypto market looks pretty bloody today, and this is not something unexpected considering the massive volatility in the crypto space and the geopolitical issues that we have been seeing lately.

It’s been reported that the blockchain analytics firm Santiment has just issued a warning to investors that top altcoin Ethereum (ETH) is at risk of falling further based on a key metric.

In a new article, the market intelligence company says that based on ETH’s Market Value to Realized Value (MVRV) over a seven-day period, ETH is now in a “danger zone.”

“ETH’s MVRV 7D which measures the short-term profit/loss of holders is showing that we have entered the danger zone and reached the peak in the past three months, which historically saw short-term holders who are well in profit….take some off the table.”

Just in case you did not know, an asset’s MVRV is determined by dividing its market value by its realized value.

An elevated MVRV value suggests that there is a high level of unrealized profit – this means that there is a risk of investors liquidating their assets for gains.

On the other hand, a low MVRV is suggesting that there is a low level of unrealized profits which could be an indication that an asset is undervalued or is suffering from low demand.

Santiment noted that Ethereum is dropping in price and MVRV could be healthy for the digital asset.

“A drop in price and MVRV in coming days would help make for a good reset and opportunity.”

Santiment also warned that Ethereum’s price action is flashing bearish signals. The firm says that bulls need to step up to avoid a potential sell-off event.

“Following the January 2022 lows, February has put in a higher low so far. Bulls better hope that resistance around $3100 – $3200 [range] breaks to establish a higher high for further continuation.”

At the moment of writing this article, ETH is trading in the red and the coin is priced at $2,629.