One of the Ethereum on-chain indicators signals that the token has entered the bottom phase.

Ethereum’s native token, Ethereum (ETH), posted a strong recovery after falling to $880 on June 18, its lowest level in eighteen months.

ETH Price Returned 30% in Two Days
On June 19, the price of Ether topped $1,150, an increase of over 30% in just two days. However, at the start of a new weekly session on June 20, the ETH/USD pair hinted that it might be reversing its weekend gains, with the price dropping nearly 9% from a high of $1,150.

PostyXBT, an independent market analyst, urged its 79,800 followers to be wary of the recent ETH price rally, noting that the move “will be pure fake.” Excerpts from his statement:

“This appears to be an opportunity to go long up to $1,250, but BTC still hasn’t regained its similar level.”

4-hour ETH/USD price chart. Source: PostyXBT/TradingView
Next ETH price drop target: $700-800
The announcements came as Ethereum entered a bear market along with other leading cryptocurrencies including Bitcoin (BTC), Solana (SOL) and Cardano (ADA).

ETH/USD is currently trading 77% below its all-time high of $4,951, but some tokens are up to 90% below their 2021 high.

Concerns about the Federal Reserve’s tightening policy to curb inflation have fueled these sell-offs, hurting parts of traditional stock markets. In particular, the US Federal Reserve plans to raise interest rates through 2023, potentially leaving investors with less liquidity to buy riskier assets like BTC and ETH.

In addition, forced selling and liquidity problems caused by the so-called Decentralized Finance or DeFi sector have added to the downward pressure on the crypto market, limiting the prospects for a continued Ethereum recovery.

Crypto analyst Kapo says that ETH has not yet bottomed out and that its price could drop even further, approaching the $700-$800 range.

Lower sign of ETH price?
Meanwhile, a metric that tracks the difference between the market value of Ether and the realized value suggests that ETH/USD has bottomed out.

The so-called “MVRV-Z-Score” assesses when Ether is overpriced or underpriced compared to its “fair” or realized value. Thus, if the market value exceeded the realized value, this historically meant the peak of the bull run.

Conversely, a drop in market value below realized value indicates a bear market bottom (the green area in the chart below). Ethereum’s MVRV-Z-Score entered the same buy zone in early June and is now consolidating there.

Ethereum MVRV Z-score. Source: glassnode
However, this does not necessarily mean a trend reversal, as the MVRV price ratio during the 2018 bear market shows.

Related: 5 indicators traders can use to know when the cryptocurrency bear market is ending

Notably, on August 12, 2018, Ethereum’s Z-Score MVRV dropped into the green when the price was around $319. But the Ethereum token hit its bottom much later, on December 14, 2018, when the price reached almost $85.

In other words, Ethereum has entered a bottom phase at best when the on-chain fractal is valid in 2022.

Source: CoinTelegraph