On April 14, the price of Ether ( ETH ) just hit a record high of $2,400, and although the price has more than tripled since the beginning of this year, the current speculative premium suggests there is plenty of room. to the upside.
While the current price of Ether is around $2375, the realized price , which means that the average price paid by all investors who currently hold Ether is $802. This means that current buyers of Ether are willing to pay 2.99 times the price that all current holders paid on average for their Ether. While that may sound high, that multiple rose to 6 during the recent bull market.
To get this multiple, the market value of ether (the current price of ether) is divided by the realized value (the average price that all current holders paid for their ether). In short, this multiple is called the MVRV ratio and was invented by David Puella and Murad Mahmudov . It can also be described as a multiple of the market cost basis of an asset.
Historically, the MVRV ratio has been a good signal when mania has gotten out of hand, i.e., when the multiple has reached a value above 4 and a value below 1 has proven to be a good buying opportunity.
The chart below shows the multiple during Ether's existence. It turns out that as of December 2019. It follows an uptrend channel.
If this trend were to continue and a similar increase in the MVRV ratio as in the past were to occur, a multiple of 5 could eventually be reached by the end of May. Given the current realized price of $802, this would suggest an Ether market price of $4010 and would be a 71% increase in price.
Furthermore, as more buyers enter the market, the realized price is expected to increase over time. In the past month alone, it has risen 15.1%. Projecting this to the end of May, the realized price could rise 26.43% to around $1014 per ether. Based on a multiple of 5, this would give a market price of $5070 per ether, an increase of 116%.
