Ethereum (ETH) May Be Approaching the End of Its Capitulation Phase: Analyst

Ethereum (ETH) may be nearing the end of its capitulation phase, according to renowned crypto analyst Ali Martinez.

Renowned crypto analyst Ali Martinez recently took to X to suggest that Ethereum (ETH) may be nearing the end of its capitulation phase.

The analyst stated that Ethereum’s Entity-Adjusted Dormancy Flow—which measures Ethereum’s market cap relative to its dormancy value, adjusted for unique entities rather than raw addresses—has dropped below the one-million mark.

According to Martinez, this historically indicates a macro bottom zone for Ethereum, suggesting that the second-largest cryptocurrency by market capitalization could be undervalued.

“This is the 4th time it touches this zone in the last 3 cycles. Each time it signaled a MACRO BOTTOM. It indicates low broader market sentiment as Dormancy is low, which means long-term holders are holding and smart money might be stepping in.”

Dormancy Flow: A Key Indicator of Recovery

Martinez’s analysis highlights the significance of Ethereum’s dormancy flow in identifying potential turning points in the market. According to the analyst, a drop in this metric typically signals low sentiment among the broader market, suggesting that long-term holders are less inclined to sell. This could be a sign that the “smart money” is accumulating, potentially setting the stage for a price recovery.

“When this happens, it might indicate that capitulation has already occurred, and smart money might be stepping in,” Martinez explained.

In simpler terms, Ethereum could have already bottomed out, and investors may soon see a rebound as long-term holders resist the urge to sell off their positions.

A Look Back at Historical Patterns

Martinez’s observations are not without precedent.

Similar drops in Ethereum’s Entity-Adjusted Dormancy Flow have historically coincided with market bottoms, with price recoveries unfolding afterwards.

Those who have closely followed Ethereum’s past cycles may recall that in 2020, when the cryptocurrency was trading at around $100, it experienced a prolonged period of accumulation.

This led to a substantial rally, propelling ETH to reach a high of $480 in 2021.

What’s Next for Ethereum?

While Martinez’s analysis doesn’t guarantee immediate price movement, it does suggest that Ethereum could be on the cusp of a reversal.

For investors, this could be an opportunity to accumulate U.S.-based investors.