Ethereum’s current downfall has made many investors embark on a selling spree. According to Ali Martinez, given that Ethereum’s Entity-Adjusted Dormancy Flow has dropped below one million, the price of $ETH may be about to hit a macro bottom.
The ratio of market capitalization to inactive coin activity is measured by this on-chain indicator, which is frequently used to assess market cycles and long-term holder behavior.
The prediction comes at a time when Ethereum has fallen continuously, standing at $1,557.89 at the press time.
Ethereum Faces Undervalued Sentiments: What is Happening?
Ethereum is undervalued at the moment according to the technical indicators and about to enter a phase where long-term investors might consider offloading their holdings.
How often coins are moved is reflected in the dormancy flow. If the metric is low, it indicates that there is less selling pressure on older coins, which are usually held by long-term believers.
The accumulation of strong hands in anticipation of a future rise is usually linked to bear market bottoms or early-stage recoveries.
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Ethereum To Likely See Accumulation Zone Woes
Ethereum may be entering an accumulation zone if the current decline below the $1 million level continues, being in tandem with past cycle lows.
Contrary to other sentiments, the pattern indicates rising confidence among long-term holders and possibly little downside from here, even though short-term volatility may continue.
If market fundamentals continue to be solid, investors observing on-chain data might interpret this as a bullish signal. Dormancy flow is a helpful indicator, as always, but it should be weighed against other measures and the overall market environment.
Ethereum’s Long-Term Holders Undertake Amassing Actions
Ethereum’s current market and on-chain metrics indicate a generally negative mood, which is frequently an indication that investors are apprehensive or uneasy.
This usually happens close to market bottoms, when weaker hands sell their holdings at a loss due to price drops and unfavorable sentiment. As the selling pressure lessens, these stages frequently signal a turning point.
Long-term investors and institutions, known as “smart money,” may be covertly amassing $ETH at these lower levels, according to indications.
These organizations typically purchase during times of anxiety to profit from assets that are undervalued. When taken together, these indicators suggest that Ethereum may be in an accumulation phase, laying the groundwork for a possible comeback when market conditions improve and investor confidence starts to rise again.
Ethereum Underperforms in Comparison With Bitcoin
As UnoCrypto reported earlier, Bitcoin’s realized capitalization has increased by $468 billion since FTX’s crash in November 2022, a 117% gain that demonstrates its tenacity and leadership in the cryptocurrency market.
Ethereum’s realized capitalization, on the other hand, has increased by only $61 billion, or 32%, within the same time frame, indicating a relatively modest recovery.
Realized capitalization provides a more accurate picture of actual capital inflows and investor behavior than standard market capitalization since it takes into consideration the price at which each coin is last traded.
Given that more money has moved into BTC than ETH during the post-FTX market recovery, this stark contrast indicates increased investor trust in the cryptocurrency.