ETH - POST FOMC

Assets covered: Ethereum (ETH)

Metrics used: Price, MVRV 7D, Supply on Exchanges, AAVE debt, Historical balance

Charts: https://app.santiment.net/s/m_b-6LOR

Price

Looks like post FOMC (with no new surprises in the meeting), folks are getting risk on again as the S&P and crypto got a pretty decent relief bounce. No surprises here since the crypto market is still highly correlated with the S&P.

With it, ETH is finally showing some decent price action and relative strength against BTC as we can observe from the breakout in ETH/BTC pairing.

So with Monday here now, if correlation remains, a positive S&P opening should naturally translate to continued rally in crypto.

It's also interesting to note that, so far, post FOMCs have seen relief bounces until 1 or 2 weeks before the next FOMC event (May 3rd - 4th).

CPI prints pre-empts the market for the next FOMC outlook and tends to mark a local top so far. The next CPI print is on April 11th.

Price action and Outstanding debt

While there might be some risk on action, we are no where near the confidence and liquidity we saw back in July 2020 (post covid crash) where we saw huge debt being undertaken from lending protocols like AAVE according to MatteoLeibowitz.

Fast forward to today, debt undertaking is showing that no one is willing to undertake huge debts to speculate in such uncertain times.

It's pretty interesting to observe the Outstanding debt to ETH price, in prior major tops, smart money derisked a substantial amount accordingly (1 or 2 weeks before market tops out).

MVRV 7D

ETH's MVRV 7D which measures the short-term profit/loss of holders is showing that we have entered the danger zone and have retraced from the peak, which historically saw short-term holders who are well in profit....take some off the table.

A drop in price and MVRV in coming days would help make for a good reset and opportunity.

Supply on Exchanges

ETH saw an acceleration in Supply on Exchange in early Feb 2022, which quite evidently reflected its sell pressure through February. However, since late Feb, we are starting to see a continued outflow and it's still ongoing for now, which should help alleviate sell pressure.

ETH 2.0 related deposits growing

As we get closer to Q2 2022 where the ETH merge should happen, we are seeing ETH being deposited into the ETH 2.0 contract accelerating.

Post FOMC meeting, there was an immediate spike and since then, it went from 10.1M ETH to 10.63M ETH in the ETH 2.0 staking contract.

Besides that, we are also observing more ETH going into the Lido stETH/ETH curve liquidity pool contract since late Feb 2022.

Looks like some folks are getting ready for what's to come. We should also see huge spikes in social volume eventually.