Ethereum News Today: Ethereum’s Rising NVT and Korea Premium Index Point to Short-Term Correction Risk

The recent performance by Ethereum is starting to overheat, with on-chain and social data showing speculation and declining fundamentals. The Korea Premium Index, one of the key indicators of the comparisons between the trading price of Ethereum on Korean exchanges and that of the rest of the world, has skyrocketed over 8%, which signals an increase in retail activity. 

A high Korea Premium usually indicates aggressive purchases by retail investors. Analysts observe that this activity is likely to cause price distortion when sentimental trades prevail over normal growth. During the previous cycles, before the recent decline, significant premiums were earned by larger investors, leading to a temporary correction.

The growing difference between Korean and world prices is an indicator that speculative demand is a key contributing factor to the recent rally. This trend can shift in the near future, as long as institutional investors begin to offload their stakes.

Network Usage Declines as ETH NVT Ratio and Social Indicators Drop

Although Ethereum has been doing well price-wise, its social dominance, or the share of crypto-related discussion dedicated to ETH, has decreased to around 5.17%. This is a downward trend, indicating that online activity is experiencing a decline despite the high price. The decline in social attention has been historically associated with a decrease in retail participation, which in turn lowers trading volume and volatility in the short term.

Meanwhile, the ETH NVT ratio has risen to 916, indicating that the price increase is being outpaced by actual network activity. A high NVT value indicates that the network is being valued more than the transaction value it represents, and this is usually a result of speculative momentum.

This dislocation of Ethereum price action and utility points to the risk of a short-term reversal if transactional activity does not recover. Long-term development will likely require the growth of user activity, on-chain transactions, and the activity of decentralized applications.

Also Read: Ethereum Holds $4K as Brevis’ zkEVM Sparks Network Evolution

Rising Sell Pressure Signals Short-Term Correction Risk

On-chain data provided by CryptoQuant indicates that the proportion of taker sells has increased, suggesting more selling activity on spot exchanges. This indicator typically represents the process of profit-taking by traders who had previously taken positions in the rally. 

The liquidity in the market varies due to the selling of positions by experienced traders to new entrants, which increases the possibility of short-term price reversals among the new entrants. Without improvement in network metrics, the current rally is likely to lose ground as traders seek to make profits.