ETH Bull Run Entering New Phase

ETH MVRV Ratio. May 12, 2021. Source: Glassnode.
ETH MVRV Ratio. May 12, 2021. Source: Glassnode.

ETH’s Market Value to Realized Value (MVRV) ratio and Net Unrealized Profit/Loss (NUPL) are touching multi-year highs.

Disclaimer: This is NOT investment advice. All investments in cryptocurrencies are risky and you should do your own research. This article is for informational purposes only.

Ether, the base layer token of decentralized finance, is on an absolute tear.

During the past two weeks, the price appreciated roughly 86% from approximately $2,200 to over $4,000. The frequency of all-time highs and the optimism within the online DeFi communities are both stunning.

Like bears coming out of hibernation, many investors who endured a cold, multi-year bear market are now emerging from their caves starving for validation. And they are loudly touting the arrival of DeFi in the mainstream.

ETH’s Current MVRV Ratio

The MVRV ratio is calculated by first obtaining the current market capitalization of an asset which is equal to the asset’s current price multiplied by the number of shares/securities in the market.

In other words, if there are 100 tokens in the market and the current price is $10 apiece, then the market cap is $1000.

After you calculate the market cap number (i.e. the Market Value), you then divide that by the Realized Value. This Realized Value is equal to the sum of all the prices at which all ETH was last purchased.

For example, if 50 of the 100 tokens were purchased at a $1 price, 20 of the tokens were purchased at $5 price, and 30 of the tokens were purchased at a $9 price, then the Realized Value would be equal to the following equation:

(50 x $1) + (20 x $5) + (30 x $9) = $420 Realized Value

Now, that you have both Market Value and Realized Value, it’s not hard to calculate the MVRV ratio. In our example, this calculation would be $1000 Market Value / $420 Realized Value = 2.38 MVRV

Okay, enough with all the math…what’s the point?

The point is that the MVRV ratio is a fantastic way to better understand the current profit-taking pressure on the psyche of ETH investors at-large.

And, since there are multiple years of data and millions of investors, an aggregated metric of this profit-taking pressure can be very predictive if we operate under the thesis that human brains remain the same (they do).

Side note: although human brains don’t change biologically, outside factors acting upon the psyche of investors do change. Rapidly, in fact. I will address some bullish outside factors at the end of this article.

OK, let’s quickly take a peek at the current MVRV ratio of ETH.

ETH MVRV Ratio. May 12, 2021. Source: Glassnode.
ETH MVRV Ratio. May 12, 2021. Source: Glassnode.

As you can see in the chart above, the current MVRV ratio is around 3.6 today on May 12, 2021. This is a touch lower than a few days ago (after the brief corrections) but this current 3.6 MVRV ratio is still…

  • A high water mark during this bull run. Even the Feb 2021 price correction when ETH fell roughly 30% from $1900 to $1200 didn’t see a MVRV ratio this high.
  • The highest MVRV ratio since January 2018. At that time, ETH was in the middle of its fall from roughly $1300 to $400.

Although the MVRV ratio isn’t as high as its peak over over 6.0 in June 2017 or 5.9 in January 2018, long-term data from both BTC and ETH suggest that the maturity of an asset correlates with lower MVRV ratio peaks. Thus, price corrections become more likely to occur at lower and lower MVRV ratios.

For example, see BTC’s MVRV ratios below and notice the general trend of lower and lower MVRV peaks.

BTC MVRV Ratio. May 12, 2021. Source: Glassnode.
BTC MVRV Ratio. May 12, 2021. Source: Glassnode.

What does all this mean?

Well, for starters, this doesn’t mean that ETH is about to tank 90%.

But, it does mean that ETH is definitely entering a new phase in this bull run and a near-term, large market correction could be coming this next week.

ETH’s Current Net Unrealized Profit/Loss

The Net Unrealized Profit/Loss metric is a corollary metric to the MVRV ratio. It is calculated as follows:

NUPL = (Market Value – Realized Value) / Market Value

In short, it gives you the average profit/loss of every coin if it was sold right now at the current price.

Thus, it’s a great way to track the current profit-taking pressure on the psyche of current ETH asset holders.

Furthermore, the metric works so that if NUPL is below zero, then the current average profit/loss position of ETH asset holders is also negative.

On the flip side, if NUPL is above zero, then the average ETH asset holder would make a profit if they sell now at the current price.

Even better, the NUPL essentially tells you what percentage of the total market cap is currently sitting there as unrealized profit or loss.

Going back to our initial example, the NUPL would be calculated like this:

NUPL = (Market Cap Value – Realized Value) / Market Cap Value


($1000 – $420 ) / ($1000) = 0.58

This would mean that the net unrealized profit of ETH asset holders equals an astounding 58% of the market cap.

So, what’s the current on-chain ETH data saying right now?

Take a look.

ETH Net Unrealized Profit/Loss. May 12, 2021. Source: Glassnode.
ETH Net Unrealized Profit/Loss. May 12, 2021. Source: Glassnode.

As you can see from the chart above, the current NUPL for ETH is a jaw-dropping 0.77.

This means that net unrealized profit of all ETH asset holders is equal 77% of the current ETH market cap.

It’s only within the last few days that this metric crossed the 0.75 threshold. for the first time since January 2018.

As seen in the chart, Glassnode now categorizes the current state of the market as “Euphoria — Greed.” This essentially means that if ETH skyrockets we will think back to this as a time of euphoria…or if it crashes we will remember this time period as one of foolish greed.

Again, to be clear, crossing the 0.75 NUPL threshold does not mean that ETH is going to plunge or endure a serious correction. ETH spent considerable time at or above this metric before ultimately dropping significantly during the bull run in 2017.

So, there could be very, very serious gains to be made in the months to come which will not be retraced. But, this definitely means the market has entered a new phase.

Notably, BTC has barely scraped this 0.75 NUPL threshold during this entire bull run over the last six months. See the chart below:

Now vs. Past: Five Key Differences & Reasons to Remain Very Bullish

There are four key differences between the current state of ETH vs. the past which provide reasons to remain very bullish despite ETH prices reaching a new phase in this cycle. These reasons provide rationale to the thinking that the gains in the coming months will not be retraced for years to come; if ever.

  1. Ether ETFs might be coming soon. These ETFs were not even remotely close to a reality in 2017 & 2018. But many believe they are coming soon. In fact, asset management firm just filed an application with the SEC this past Friday to create an ETH ETF; the first of its kind in the USA. Such an investment vehicle opens the door to millions of people putting 1% of their IRAs into ETH. The result would be an unbelievable influx of capital.
  2. EIP-1559 is happening soon. The London hard fork & EIP-1559 is tentatively scheduled for July. This upgrade to the network should vastly improve ETH’s value as a capital asset by essentially putting deflationary pressure on the supply while increasing staking returns. Some analysts think that staking ETH could conservatively yield 25% APR.
  3. Glassnode reports 4.4+ million ETH is currently staked in ETH 2.0 validators. This is a sharp, roughly 8% increase in just the past week. Remember: staked ETH cannot be pulled out of the validators until after EIP-1559 is released and this means that it is much more illiquid.
  4. The amount of ETH locked in smart contracts right now is at a high water mark. According to Glassnode, the percentage of ETH supply currently held in smart contracts is an astounding 22.5%. The bull run of 2017 never saw a spike in the amount of ETH held in smart contracts. The percentage of ETH supply held in smart contracts stayed stayed steadily between 12.0 to 14.5% from December 2016 to January 2019. However, in stark contrast to that bull run, the percent of ETH supply held in smart contracts roughly doubled from about 11.5% in June 2020 to over 22.5% currently. Of course, some ETH held in smart contracts is very liquid… but, some of it is not. Smart contracts often necessitate that ETH isn’t moved in order to collateralize its existence. All of this means that an additional 10% of all ETH supply is less likely to submit to short-term profit-taking pressure. This is definitely bullish for ETH hitting a new adoption phase. And it is markedly different than the last bull run.
ETH’s Percent of Supply in Smart Contracts. Source: Glassnode. May 10, 2021.

Final Thoughts

As always, I remain incredibly bullish on blockchain technology and decentralized finance.

However, I recently tried to track my complete portfolio across BlockFi, Coinbase Pro, FTX US, MetaMask, Terra Station, and SolFlare and I was incredibly disappointed. It took me hours to find a good portfolio tracker and the options weren’t great.

Some API connections exist that will automatically update your portfolio when you make transactions. But, no automatic and complete portfolio tracking solution currently exists.

Even worse, some of the automatically inputted transactions were wrongly categorized for tax purposes, Thus, I am relegated to manually inputting and adjusting many of my crypto transactions for tax purposes.

Until this gets fixed, using crypto in our everyday lives is a nightmare.


Although history repeats itself, it doesn’t always repeat itself in the same way. As the saying goes “What has been will be again, what has been done will be done again; there is nothing new under the sun.”

But, wait: what about iPhones and planes? Surely technology changes! The blockchain is a new technology!


But the human psyche generally stays same. Thus, it is extremely powerful to be able to quantify the current profit-taking pressure upon the psyche of ETH asset holders.

The MVRV and NUPL ratios give us a way to do just that.

In light of that, it’s clear that the current 3.7 MVRV ratio and 0.77 NUPL of ETH imply that we’ve entered a truly new phase in this bull run.

Buckle up,

Further resources:

  • For more info regarding MVRV, check out this article on Medium.
  • To learn more about the NUPL metric, check out this article on Medium.

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