After a rather impressive market rally and some exciting new all-time highs by some altcoins, the market couldn’t escape consolidation. At press time, on the daily chart, Bitcoin and Ethereum had shed around 3% of their values.
However, as the larger market consolidated, Ethereum noted an independent trajectory. Not in terms of price action, but on-chain data that painted a quick recovery from these losses. However, with the price looking bearish, can certain bullish metrics turn the situation in Ethereum’s favor? Let’s find out.
Is Ethereum the safer bet?
The market was on fire this last month and some altcoins shined brighter than others. The London hard fork on the Ethereum blockchain gave it a much-needed push both in terms of price and social sentiment. In spite of that, however, Ethereum’s run, according to a Santiment report, has been “relatively boring compared to the altcoin boom.”
In fact, it has projected gains of only 41% compared to others like Cardano, Terra, and Avalanche, over the past 30 days.
Source: Santiment
On the upside, the report also highlighted that for the aforementioned reasons, ETH is in fact less of a risk to hold now. This, especially when compared to something like Cardano or other assets that have been absolutely roaring this month.
Notably, however, at the time of writing, Ethereum’s Sharpe ratio had dipped by almost 50% over the last week. Ethereum’s Sharpe ratio had a value of 4.98, while the same for Cardano was 8.3 and 7.6 for BNB.
Source: Messari
Ethereum testing its support levels at press time may have fueled this drop in the Sharpe ratio. Generally, the greater the value of the Sharpe ratio, the more attractive the risk-adjusted returns will be. The same was higher for altcoins like Cardano and BNB, at the time of writing.
Nonetheless, as previously touched upon, ETH’s ratio seemed to have an upside to it as well, fueling a possible northbound move.
Ethereum can go up if…
Ethereum’s token circulation breached its two-month high levels recently. This is a good sign, one that can pull up the asset’s price if it slumps below $3k.
Furthermore, ETH’s weighted social sentiment, after being euphoric for over 4 weeks, indicated that the crowd had finally edged into negative territory compared to historical averages. A further push into the negative territory would be a great sign that a price bottom is on the horizon. This could also act as a good dip buying opportunity for buyers in the mid-short term.
Source: Santiment
However, notably, the NVT for Ethereum hit a 3-month ATH. This meant that the network was overvalued at the time and that a reversal could be in store if higher values aren’t noted soon.
If this is in fact the highest value the NVT notes, Ethereum could see a short-term correction. However, a push from the bulls could avert the same.