Ethereum Drops 20% to $1,300 Amid Market Volatility

Ethereum's price has been under scrutiny as it recently dropped to $1,300 following a period of consolidation and external volatility. This volatility was triggered by macro events, including a feud between prominent figures, which dragged the cryptocurrency down to its lowest point in recent weeks.

Analysts are closely monitoring the MVRV Z-Score, a key indicator that has historically played a crucial role in determining Ethereum's price momentum. According to crypto analyst Burak Kesmeci, the MVRV Z-Score for Ethereum is currently at 1.21 points and is losing momentum. This metric has been particularly notable in previous bull and bear periods, with values of 0.80 and 3.00 points marking significant turning points.

When the MVRV Z-Score rises above 3.00 points, Ethereum tends to enter an overbought region, creating opportunities for sellers to gradually exit their positions. Conversely, when the MVRV Z-Score falls below 1.03, there is a risk that Ethereum could drop to around $2,323. If the MVRV Z-Score stays above 1.03, Ethereum might retest the $2,700 level. However, for a full-fledged breakout, the MVRV Z-Score must climb back toward 1.90.

Currently, Ethereum's MVRV Z-Score is in a negative situation, having failed to reclaim bull levels since hitting 2.25. For a potential uptrend, the MVRV Z-Score must first close above 1.90 levels, which would indicate a more secure investor sentiment and accelerate upward movement. The Relative Strength Index (RSI) for Ethereum has also dropped sharply from 61 to 46, suggesting fading buyer interest and rising sell pressure.

The bearish structure is further confirmed by Ethereum's Taker Buy-Sell Ratio, which has dipped for two consecutive days. This metric suggests that sellers are dominating the market, eroding the chances of MVRV recovery. Unless Ethereum reclaims 1.90 on the MVRV Z-Score, a broader rally or altcoin season remains unlikely.

Ethereum is currently at a crossroads, with buyers' momentum weakening and profit-taking rising. If these conditions continue, Ethereum risks a downside move to around $2,323. Historically, bull market tops have occurred between 2.9 and 3.4, meaning Ethereum remains undervalued for now. Traders are closely eyeing the $2,323 zone as a potential support level, with the outcome of Ethereum's price movement hinging on the MVRV Z-Score's ability to reclaim bullish levels.