According to a noted cryptocurrency analyst, on-chain indicators suggest that Ethereum (ETH), a leading blockchain for smart contracts, may currently be undervalued.
Analyst Ali Martinez, with a Twitter (X) following of 135,100, reported that Ethereum‘s Entity-Adjusted Dormancy Flow has fallen below one million.
Dormancy Flow Indicator Signals Potential Bottom
This decrease, according to Martinez, typically signals that Ethereum could be forming a significant bottom in its market cycle.
Macro Bottom Zone and Long-Term Holder Sentiment
Martinez stated that historically, this Dormancy Flow level points to a “macro bottom zone.”
This suggests Ethereum’s current price may be lower than its intrinsic value, and long-term holders are less inclined to sell their assets.
The indicator further implies that Ethereum may be establishing major cycle lows.
Entity-Adjusted Dormancy Flow Explained
Glassnode, a crypto analytics firm, uses the Entity-Adjusted Dormancy Flow to pinpoint market bottoms and assess the stability of bull market conditions.
Glassnode clarifies that the metric assesses whether an asset is in a primarily bullish or bearish trend by calculating the ratio of market capitalization to annualized dormancy value in US dollars.
Significant Ethereum Outflow from Exchanges Observed
Martinez also observed a substantial withdrawal of 453,000 Ethereum from cryptocurrency exchanges over the past five days.
Such large outflows from exchanges can be interpreted as a bullish sign, potentially indicating the accumulation of the asset by major investors.
Current Ethereum Price Update
At the time of reporting, Ethereum is trading at $1,558, reflecting a 2% increase over the previous 24 hours.
Also Read: Stablecoin Surge With Ethereum Price Potential Reach to $2,000
