S&P and crypto got quite a bounce after FOMC, meaning investors are getting their risk on again. The S&P and crypto markets are highly correlated, hence it was quite expected of them to perform parallelly.
As shown by the breakout in the ETH/BTC pairing, ETH is now displaying some solid price movement and relative strength vs BTC. This data was affirmed by the research done by Santiment. The firm used 5 metrics to support its data.
While there is some danger in action, according to MatteoLeibowitz, we are nowhere near the trust and liquidity we witnessed in July 2020 (post-covid crisis), when the large debt was taken on using lending protocols like AAVE.
However, as of now, debt undertaking demonstrates that no one is prepared to take on large loans in order to invest in such unpredictable times.
Ethereum’s Market Value to Realized Value
According to Santiment, the MVRV 7D of ETH, which gauges holders’ short-term profit/loss, indicates that we have reached the danger zone and have retraced from the top, which historically witnessed short-term holders who are well in profit.
In the following days, a decline in price and MVRV would help to create a nice reset and opportunity.
Supply on exchanges
In early February 2022, ETH experienced an increase in supply on the exchange, which clearly mirrored its sell pressure throughout February. However, as per Santiment, we are seeing a steady outflow since late February, and it’s still continuing strong, which could help relieve sell pressure.
Ethereum 2.0
As we approach closer to Q2 2022, when the ETH merging is expected to take place, the amount of ETH placed into the ETH 2.0 contract is increasing. After the FOMC meeting, there was an instant surge, and the ETH 2.0 staking contract has gone from 10.1 million to 10.63 million ETH since then. Aside from that, starting late February 2022, there was more ETH entering the Lido stETH/ETH curve liquidity pool contract.
At the price of the publication. ETH was trading at $3,011.02.