In the latest Ethereum news, the coin has entered a critical phase

This metric represents the psychological threshold for risk, and a drop here often signals bearish sentiment.

The latest Ethereum news signals a critical phase for the coin as it falls below the Realized Price. This metric, which represents the psychological threshold for risk, is closely watched by analysts. A drop here often signals bearish sentiment and can be attributed to increased loss-driven selling and shrinking investor confidence, ultimately leading to the capitulation phase.

However, whenever the ETH Realized Price has underperformed, it has led to long-term bottom zones, resulting in heavy accumulation of the cryptocurrency in question.

The crypto winter has seen plenty of altcoins drop below the price they were last sold at, which is also known as the Realized Price. This on-chain indicator is used to calculate the average cost of all coins in circulation, based on their last transfer price.

According to crypto analyst theKriptolik, the recent Ethereum price drop has pushed it below its realized price.

This means that the average realized price is now above the market price, which is currently trading at the $1,550 levels, showing a 4-5% recovery after hitting the $1,430 low earlier this week.

What Happens When ETH Price Drops Below Realized Price?

Explaining the implications of the recent ETH price drop, the analyst said that the drop in Realized Price tends to increase loss-driven selling as investors panic.

He further stated that such situations usually end up in the capitulation phase, where investor confidence shrinks and sell-offs occur. Lastly, the analyst mentioned that whenever the ETH Realized Price has underperformed, it has led to long-term bottom zones. This results in heavy accumulation of the cryptocurrency in question.

Each ETH is evaluated based on the price it was last transferred at. When you average out all those prices, you get the Realized Price. This gives us a much more "realistic" sense of what the average investor paid for their ETH, and it often paints a very different picture from the current market price.

Recently, ETH dropped below its Realized Price, which is usually a good indicator that we're approaching a bottom and can expect some accumulation.

This is because when the price trades below the Realized Price for an extended period, it usually results in more selling pressure due to investors realizing losses. However, it also creates an opportunity for buying at lower prices and averaging down.

Moreover, when the price drops below the Realized Price, it often signals that the market is becoming oversold and a rebound could be expected.

Historically, whenever ETH has dropped below its Realized Price for an extended period, it has led to significant price bottoms and new bull markets.

For example, in the previous bear market, ETH dropped below its Realized Price in early 2023, and it took around six months for the price to recover and break above the Realized Price again, marking the beginning of a new bull market.

Of course, this time around, we’re yet to see any signals of an approaching bull market, even with ETH dropping below the critical realized price zone.

While the Realized Price sets the mood to a bearish one, a notable ray of hope for the Ethereum price is that the ETH whales have come back, buying over 130,000 ETH in the past few days.

This signals confidence among institutional players despite the uncertain market behavior. This accumulation also coincides with analysts claiming that the Ethereum price may be forming a bottom.

The post Ethereum Price Hits Critical Phase As It Falls Below Realized Price appeared first on Benzinga.