Ethereum (ETH) has flashed a rare buy signal, as the second-largest cryptocurrency by reported market cap recently slid below the whales’ realized price (RP). History shows that buying ETH at such price levels has eventually turned out to be a profitable decision.
Ethereum trades below whales’ realized price
During the latest market price crash, ETH fell below the RP of whales holding at least 100,000 ETH. This amounts to almost $200 million according to current market prices.
According to the latest market data, the RP for these whales currently hovers around $2,075. Meanwhile, ETH trades at $2,019 at the time of writing, slightly below the whales’ RP.
Notably, the last time ETH traded below the RP of whales holding at least 100,000 ETH after hitting a new all-time high (ATH) was way back in September 2018. At the time, ETH prices remained around whales’ RP for approximately six months, giving investors enough time to accumulate ETH at discounted prices.
The logic behind such behavior of ETH is that when the digital currency’s price falls below whales’ RP, it means that even the large investors are at a temporary loss. This can create a psychological effect, as whales are less likely to sell at losses, which can create favorable conditions for the underlying asset.
Currently, ETH offers a strong risk-reward ratio, which can be worth exploring for investors with a moderate appetite for risk-on assets. The more conservative investors can choose to deploy strategies like dollar-cost averaging to spread out their buys instead of going all-in at once.
Is ETH due for further correction?
While ETH trading below whales’ RP may seem like an attractive buy zone for investors, there are still some factors that may extend the cryptocurrency’s downward spiral. For instance, the Binance ETH derivatives still show a long bias, implying that traders are expecting the digital asset to recover its recent losses.
Usually, the market tends to run against the popular or the ‘overcrowded’ trade. In ETH’s context, it may mean that the market may punish the traders who are long ETH currently by pushing the digital asset’s price even lower.
