A quant has explained how Ethereum is now in its secondary bull run phase according to the trend in this popular on-chain indicator.

In a CryptoQuant Quicktake post, an analyst talked about the latest trend in the Market Value to Realized Value (MVRV) Ratio for Ethereum. The “MVRV Ratio” is an on-chain metric that keeps track of the ratio between the asset’s market cap and its realized cap.

The realized cap here refers to a capitalization model that calculates ETH’s total value by assuming that the value of each token is equal to the price at which it was last transacted on the network.

In effect, the model is a measure of the sum of cost basis of all tokens in circulation or more simply, a measure of the amount of capital that the investors have put into the asset. As such, the MVRV Ratio indicator compares the market cap, which is just the total value that the holders are carrying in the present, against this initial investment.

When the value of the metric is greater than 1, it means the market cap outsizes the realized cap. Such a trend implies the investors as a whole are in a state of net profit. On the other hand, it being under the threshold suggests the dominance of loss in the market.

Now, here is the chart shared by the analyst that shows how the value of the Ethereum MVRV Ratio has changed over the last few years:

As is visible in the above graph, the Ethereum MVRV Ratio shot up to a relatively high level during the first quarter of the year as the price rally took place. In the bearish consolidation that followed the run, though, the indicator cooled back down, returning to the neutral 1 level.

With the latest surge in the cryptocurrency, the MVRV Ratio has again witnessed a reversal to the upside. Interestingly, something like this was also observed during the last two bull markets, as the quant has marked in the chart.

It would appear that both of these runs involved two phases where the Ethereum MVRV Ratio rose to extreme levels, with a cooldown happening in between the two.

If the current cycle is going to show something similar, then the rally earlier in the year could have been the first of the phases, with the most recent rally potentially taking the role of the second one.

In both of the previous two cycles, the secondary bull run took the price to notably higher levels than the first one, so Ethereum might soon surpass the high from earlier in the year. This would only be, of course, if this pattern is going to hold for the current cycle.

At the time of writing, Ethereum is trading at around $3,600, up almost 8% over the past week.

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