Ethereum (ETH) Could Be Undervalued According to On-Chain Indicator
An interesting on-chain indicator suggests that Ethereum (ETH) could currently be undervalued, according to a well-known crypto analyst. Trader Ali Martinez recently shared with his followers on X that ETH’s Entity-Adjusted Dormancy Flow has dropped below one million, indicating that Ethereum might be in the process of forming a major cycle bottom.
Martinez points out that this drop historically indicates a macro bottom zone, suggesting that ETH might be undervalued and long-term holders are less likely to sell. This also implies that sentiment is low, capitulation may have already occurred, and smart money could be accumulating. The Entity-Adjusted Dormancy Flow is a metric used to time market lows and assess whether the bull market is in normal conditions. It measures the ratio of a coin’s market cap and its annualized dormancy value tracked in US dollars.
In addition to this indicator, Martinez highlights that a significant amount of Ethereum, specifically 453,000 ETH, has been withdrawn from crypto exchanges in the last five days. This movement of ETH out of exchanges can be seen as a bullish sign as it indicates that large investors are accumulating the asset.
At the time of writing, ETH is trading at $1,558, showing a more than 2% increase in the last 24 hours. This positive price action, coupled with the on-chain indicators, suggests that Ethereum could be in a favorable position for potential growth.
For more crypto news and updates, follow us on X, Facebook, and Telegram. Don’t miss out on any important updates – subscribe to get email alerts delivered directly to your inbox. Stay informed about price action and explore The Daily Hodl Mix for more insights.
(Image source: Midjourney)