While some take losses in the market, others are looking for new Ethereum entries
While some traders experience losses following crypto market dips, market participants that have not yet entered any positions are now able to get in while assets remain in the opportunity zone, according to market data provided by Santiment.
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 provides more pleasant conditions for entry, compared to periods when assets are topping out.
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 is showing whether an asset is being “overbought” or 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 provided information 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.
The long-term version of the same indicator shows that Ethereum market value is still overextended, and to enter the “Low Risk” zone, it needs to be corrected by another 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. In the event of Ethereum hitting another 40% correction, the second-largest cryptocurrency would trade at around $2,500.
