AmberLens Product Update: Introducing Ethereum Market Indicators

After the successful launch of AmberLens, Amberdata’s institutional market intelligence platform, we are excited to expand our Bitcoin market indicator coverage to Ethereum. These insightful Ethereum metrics are split between Market Top/Bottom indicators, Market Sentiment, and User Activity, giving researchers, analysts, and traders a comprehensive overview of the ongoing and historical market trends.

Market Top/Bottom Indicators

Price and Moving Averages

ETH price, 50DMA, 200DMA, and 200WMA

Short-term price indicators such as the 50-day moving average (50 DMA) coupled with long-term price indicators such as the 200-day moving average (200 DMA) and 200-week moving average (200 WMA) are often used trendlines for market analysts. Technical analysts also benefit from support and resistance trend lines with historical trends suggesting that market cycles are reset when 50 and 200 DMA lines approach the 200 WMA trendline.

In our current market environment, the price of Ether bounced back after the bear-cycle lows of 2022 and 2023. The 50 DMA has recently begun to move downwards, though time remains before the short-term indicator approaches the 200 DMA. This suggests some room in the current cycle for price persistence.

Pi Cycle Top Indicator

ETH price, 111DMA, and Pi Cycle (350DMA x2)

The Pi Cycle Indicator consists of the 111 DMA and a 2x multiple of the 350-day moving average (350 DMA x2). Often, this indicator can signal a cycle overheating or beginning to heat up. When the 111 DMA approaches the Pi Cycle, the cycle can often be considered as overheating, whereas when the gap between the two increases the cycle may be heating up.

Realized Cap

ETH Realized Capitalization and Market Capitalization

Ethereum’s Realized Capitalization is an extension of Bitcoin Realized Capitalization, but adjusted to work for account-based chains. Where UTXO networks like Bitcoin account for each UTXO’s last spent price, account-based chains such as Ethereum value the token’s price at the date of the last transaction. As the price of Ether increases and older tokens move, the realized capitalization of the network increases – the price of the old tokens is replaced with the now higher price.

Historically, when the realized cap is greater than the market cap, the network is out of profit and is in an aggregate loss. On the other hand, when the realized cap is less than the market cap, the network is in an aggregate profit.

MVRV Z-Score

ETH's MVRV and MVRV Z-Score

The Market Value to Realized Value (MVRV) and MVRV Z-score are comparisons between the network's market value and realized value. As the market value (numerator) increases relative to the realized value (denominator), the indicator rises and can indicate a market top. However, as the realized value of the network increases relative to the market value and the ratio between the two is reduced, the indicator suggests that the market is undervalued.

The MVRV Z-Score is often used to predict market price top and bottom during extreme market conditions.

Market Sentiment Indicators

Realized Price

ETH Realized Price to Market Price

Where Realized Capitalization is the total value of all Ether as of their last transaction, Realized Price is the weighted average price at which the Realized Capitalization is calculated. As tokens move more recently at higher prices than they previously moved, the Realized Price moves higher. When the Realized Price is higher than the market price, the market is assumed to be overall at a loss. In other words, more value was transferred at higher prices than the current market price, which signals that market participants may face a bear market as they are often hesitant to sell or transfer tokens at a loss.

Similarly to Bitcoin’s Realized Price, this metric may contain several “Lost Coins” or “inactive funds” that can no longer be accessed for a multitude of reasons, such as a lost private key, funds sent to the wrong address, hardware wallet lost, etc. These coins typically have a low-cost basis.

Net Unrealized Profit/Loss (NUPL)

ETH Net Unrealized Profit/Loss (NUPL)

The Net Unrealized Profit/Loss (NUPL) metric also measures the sentiment of the market through a calculation of the difference between the realized cap and market cap. While the NUPL can represent overall market profit or loss, this metric is most often interpreted within the lens of “Relative NUPL” – NUPL divided by market cap. The Relative NUPL is compared against various sentiment states such as “Euphoria” when the Relative NUPL is greater than 1, or “Capitulation” when the Relative NUPL is less than 0. Currently, Ethereum is in a state of “Belief,” having failed to enter “Hope” over the last few months.

Liquid vs Illiquid Supply

ETH Liquid vs Illiquid Supply

Finally, market sentiment can also be examined through the lens of network supply. As wallets accrue through HODLing or divest through transferring tokens, the overall network supply becomes more or less liquid. Highly liquid tokens are those accumulated by addresses that frequently transfer tokens in and out, such as centralized exchange hot wallets or high-frequency traders/bots. Illiquid tokens are those held by addresses who rarely transfer funds out of their address, most often referring to HODLers, cold storage wallets, or even lost tokens. As the fluidity of tokens increases, the network can be seen to have a more liquid supply.

User Activity Indicators

Active Addresses

Daily Ethereum Addresses: all addresses, active addresses, and passive addresses

Daily active addresses on Ethereum have generally increased over time. However, the bear markets in 2022 and 2023 saw a reduction in onchain activity and user attrition. Despite this, 2024 has seen an uptick in user activity with Layer 2 networks like Base, Polygon, and Optimism gaining steam due to lower transaction fees. User activity is likely to be a dynamic and volatile area to monitor, especially as protocols face several decisions on which network(s) to launch on first. “Active” addresses pertain to addresses that send funds that require a signature, whereas “Passive” addresses pertain to addresses that receive funds and require no signature or even private key generation. Given that many addresses send and receive on the same day, “All Addresses” is the unique number of addresses for a given day – whether they were sent or received Ether.

New Address Momentum

Ethereum new address momentum

New addresses have been ticking upward since the start of 2024 and beginning to reverse the long-term trend as seen in the 365-day moving average (365 DMA). Addresses are considered “new” when they either send or receive Ether.

Address Balance Buckets (ETH)

ETH address balance buckets for the number of addresses in each bucket

ETH address balance buckets for the total supply of ETH held in each bucket

Address balances are hugely insightful metrics when analyzing user activity on a given network, and here we offer both an address count and a supply held by various bucket sizes. In the current state of the network, a large majority of tokens are held by whales – over 90 million ETH! This supply is held by ~1,100 addresses, representing a huge concentration of tokens.

Address Balance Buckets (USD)

Ethereum address balance buckets for balances held in USD

While the supply is maintained by large whales holding greater than 10,000 ETH, most addresses hold less than $100. These generally small retail addresses have increased in number significantly since 2017, and continue to grow. Many of these can likely be considered “dead” or “inactive” and hold dust that was never transferred out.

Conclusion

Indicators are a critical component of any technical analysis of the state of the market for a digital asset. They give insight into the market sentiments and help remove bias from trading decisions by providing data-driven insights. Amberdata’s set of ETH metrics will be even more important in a world where ETH ETFs loom on the horizon. By leveraging these indicators, researchers, analysts, and traders are able to make informed decisions about their digital assets with confidence.

To learn more, launch AmberLens or schedule a demo with Amberdata here.