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Ethereum's February Gains: History Repeats or MVRV Ratio's Warning?

Coin WorldFriday, Jan 31, 2025 12:02 pm ET

1min read

As February approaches, Ethereum (ETH) investors are looking to the past for guidance on the altcoin's potential performance. Historically, February has been a strong month for Ethereum, with significant price gains recorded in previous years. However, recent on-chain data suggests a more cautious outlook, with the MVRV ratio dipping below its 160-day moving average, a signal that has often preceded significant price corrections.

Ethereum's February performance has been consistently robust, with the altcoin delivering remarkable returns in the past. In 2024 and 2017, Ethereum registered gains of 46.46% and 48.09%, respectively, outshining the monthly average and median performance. This recurring strength can be attributed to greater market activity following slower starts in January. With Ethereum entering February 2025 after a modest 4.26% decline in January, market participants are optimistic that the strong February trend could repeat itself, potentially fueling a recovery and setting the stage for another impressive performance this year.

However, the on-chain data seemed to tell a different story at press time. Ethereum's MVRV ratio dipped below its 160-day moving average, a development that has historically signaled potential downside risk. This is not the first time such a dip has occurred; in June 2024, a similar event was followed by a sharp 40% correction in ETH's price, from $3,500 to $2,100. If this trend persists, Ethereum may face intensified selling pressure, potentially revisiting lower support zones. Investors should closely monitor MVRV trends for further signs of market weakness.

Ethereum's exchange net position change has been underlining evolving market sentiment as February approaches. In late 2024, net inflows to exchanges indicated greater selling pressure, aligning with a stabilizing price trend. However, from late December through January 2025, persistent net outflows emerged, a sign of accumulation as traders moved ETH to private wallets. This is often seen as a bullish long-term signal. Recently, slight inflows have returned, hinting at caution among investors amid potential market volatility. This shift aligns with other indicators, such as the MVRV ratio, which hinted at a more cautious stance.

As Ethereum enters a historically strong month

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