43 Interactions, 2 Today
Ethereum has dominated the news over the last week, owing primarily to its massive price gains. Today, the world’s largest altcoin is generating buzz in the community ahead of its highly anticipated London hard fork. It will go live in one week. What can we expect from the top altcoin in the coming week, given the already soaring prices of altcoins as a result of Bitcoin price gains?
The altcoin market is booming
The altcoin market is performing admirably. It would not be incorrect to say that the top alt has a significant role to play in this. Ethereum, as the most valuable altcoin, has a significant impact on the prices of other major altcoins as well as alt rallying in general.
A recent report highlighted the massive increase in the global crypto population in recent months, highlighting how it has more than doubled in just four months, reaching 221 million as of June. BTC and ETH held 80 percent of the market share at the start of this year, but that dropped to 61 percent in the last month as alts increased their share from 20 percent to 38 percent during the same period.
Is Ethereum the safest bet
The larger altcoin market action will be determined by Ethereum’s moves in the coming weeks. MVRV, as shown on the coin’s charts, represents the average profit or loss of all token holders based on the price at which each token was last moved. A look at Ethereum’s MVRV (30-day) revealed that the coins were profitable. At the time of writing, the metric was at 11.54 percent, the highest since May 15.
On July 28, the number of active addresses stood at 593K, a significant increase and the highest since June 28. On July 28, there was also a significant increase in transaction volumes, highlighting large transactions for Ethereum. On July 21, a similar transaction surge occurred.
Despite Ethereum’s relatively high MVRV (30d), metrics reflected market expectations connected to the anticipated London hard fork. A report highlighted that ETH was at +9% MVRV 30d. This meant that the average profit of one month ETH holders is around 9%, which is good for holders but poses risk for buyers.
Furthermore, a look at Ethereum’s Sharpe ratio, which compares its performance to a “risk-free” asset over time, revealed that ETH peaked on the metric on July 26. The Sharpe ratio stood at 3.95. Whereas three days later, at the time of writing, the figure was 1.27.
While it has decreased by nearly half, it is still higher than the levels from the end of May to the beginning of July. As a result, the return-yielding capacity of ETH for every additional unit of risk taken was still higher than in the previous couple of months.
Here how other alts look, against ETH
MVRV was used in a recent Santiment report to highlight certain alts for ETH disposition. It’s an intriguing trend to observe, especially in terms of how alts are preparing for the ETH hard fork. Ethereum is seen alongside GRT, UNI, MKR, MATIC, and AAVE in this regard.
For the five alts, the MVRV ratio intraday (30day) varied from +4 to +9% at the same time when ETH’s was +9%. This meant that they were less risky to buy and had a more neutral market. The report further said:
“Altcoins are close to neutral. Selling is not recommended. Buying feels less risky at this point.”
So, what does this mean?
To summarise, it appears that Ethereum is a little risky for buyers looking to invest at the moment. Holders, on the other hand, are in for a good time. For a more stable market, new buyers should wait until the hard fork. Other alts, on the other hand, appear to be waiting for post-hard fork Ethereum and Bitcoin price action. Overall, this appears to be a classic “wait and see” scenario, at least in the short run.