Ethereum Price Analysis August 2024: Has it Hit the Bottom?

2024-08-07

Ethereum (ETH) experienced one of its steepest declines of the year on Monday, August 5, with the price falling 23% to $2,120, a level not seen since 2023. However, the swift recovery suggests that this plunge might mark the bottom for ETH. Several on-chain signals and technical indicators point to a potential upswing, making it a crucial time for investors to watch Ethereum's price movements closely.

Key Takeaways:

Ethereum's MVRV Z-Score Indicates Undervaluation: The Market Value to Realized Value (MVRV) Z-Score for Ethereum is currently at 0.52, suggesting that ETH is undervalued and potentially poised for a significant upswing.
Historical Patterns Point to Price Surge: If historical patterns repeat, Ethereum could see a price increase of over 100% before the year ends, reaching levels seen during previous market cycles.
Technical Indicators Support Recovery: Technical analysis, including the Relative Strength Index (RSI) and Short-Term Holder-Net Unrealized Profit/Loss (STH-NUPL), shows Ethereum is in a position to bounce back, with a retest of $2,871 possible.

On-Chain Data Suggest to Upswing

Source: Glassnode

From an on-chain perspective, Ethereum’s Market Value to Realized Value (MVRV) Z-Score has dropped to 0.52. This metric helps determine whether a cryptocurrency is undervalued or overvalued relative to its fair value. Historically, when the MVRV Z-Score exceeds 2.20, the price is near the top of the cycle. For example, in 2021, when ETH’s price hit $4,819, the metric was 3.35, and the price subsequently dropped to $2,440.

Currently, the MVRV Z-Score suggests that ETH has reached a similar level to November 2023, when ETH rose from $1,959 to over $4,000 in less than four months. If this pattern repeats, Ethereum’s price could more than double before the year ends. Another supporting indicator is the STH-NUPL, or Short-Term Holder-Net Unrealized Profit/Loss, which also helps identify market tops and bottoms. The metric is currently in the capitulation region (red), indicating market fear, which often precedes a price rebound.

Read More: How to Buy Ethereum (ETH)

Price Prediction

Source: BeinCrypto

Technical indicators also support the possibility of a significant recovery for ETH. In early 2024, ETH's price experienced a notable correction between January 12 and 26, followed by a sharp recovery on January 27. This pattern is similar to the recent 7% increase in ETH's price over the last 24 hours.

The support level around $2,220, which contributed to ETH's strong performance earlier this year, is another positive sign. The Relative Strength Index (RSI), a measure of momentum, was near oversold levels before the January rally. For context, an RSI reading below 30 indicates oversold conditions, suggesting a potential rebound. Currently, ETH's RSI indicates oversold conditions, increasing the likelihood of a price bounce. This scenario could lead to an initial target of $2,871, with sustained buying pressure potentially pushing the price to $4,094 in the coming months. However, this prediction depends on bulls maintaining the recent momentum; otherwise, the outlook may change.

FAQs

What caused Ethereum's recent price drop?

Ethereum's recent price drop of 23% was influenced by market volatility, but on-chain indicators suggest it may have reached a bottom, indicating a potential rebound.

What are the key indicators suggesting Ethereum's price might rebound?

Key indicators include the MVRV Z-Score, which indicates undervaluation, and the STH-NUPL, showing market fear. Additionally, the RSI suggests Ethereum is oversold, indicating a possible price recovery.