Ethereum Oversold and Due for a Bounce, According to InvestAnswers – Here’s Why
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A popular crypto analyst says that leading smart contract platform Ethereum (ETH) is oversold and primed for recovery.
In a new strategy session, the host of InvestAnswers tells his 402,000 YouTube subscribers that the second largest crypto asset by market cap is flashing signals that indicate a price spike is near.
The analyst points out that Ethereum’s relative strength index (RSI) is at the same point that it was in late May of last year when it embarked on a relief rally, and also June of last year right before it reversed and ultimately made all-time highs.
“When we look at [ETH’s] RSI and we compare that to the bottom prices and how those prices break through the 200-day moving average, it’s quite uncanny. So we have three areas where RSI has breached [the 200-day moving average]. We have May and June of 2021 and January of 2022.
Ethereum is very oversold and that corresponds to historical bottoms on the price chart which also almost line up perfectly with the 200-day moving average. We are now under the 200-day moving average more so than we’ve been before. This tells me that we are probably due for a bit of an ETH bounce as we go forward.”
The host then brings up the top altcoin’s market value to realized value (MVRV), which assesses whether an asset’s price is overvalued or undervalued relative to its fair market value.
“The RSI maps directly to the MVRV Z score, which again indicates when Ethereum is over or undervalued relative to its fair value.
When the market value is significantly higher than the realized value, it has historically indicated a market top… around May 2021 [was] the last market top we had.
Otherwise, where we are now is in the kill zone, totally oversold. We’ve only had three of these in the last year and that corresponds directly to the RSI.”
Ethereum is exchanging hands at $3,132 at time of writing, a 7.5% decrease from its seven-day high of $3,390.
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