In a bid to analyse traders’ forecast of Ether prices, Morgan Stanley has introduced a speculation indicator called PAVA (price-adjusted volume per address). This tool will enable ETH investors to guess Ether price trends amid extreme market conditions and shift focus to valuing the layer 1 blockchain as a network. The indicator will show possible fluctuations on ETH prices by dividing the dollar price of cryptocurrencies by the ratio of the blockchain transaction volume to active wallet addresses.
The PAVA tool will divide ETH investors into two classifications — believers and speculators, CoinDesk reported on Wednesday.
Believers will bank on Ethereum’s long-term value. These people will participate in on-chain protocol that includes staking as well as decentralised lending. Such activities play a role in hiking transaction volumes and lead to lower PAVA value.
Speculators, on the other hand, will keep their focus on ETH’s short-term price movement. This will cause an increase in active wallet addresses and result in higher PAVA value.
Citing Morgan Stanley, the CoinDesk report said the PAVA tool is stronger at identifying lower, than higher, market extremes for the dedicated asset, which in this case is Ether.
The bank founded in 1935 is not the only Wall Street lender that is delving deeper into the crypto space.
In March, Goldman Sachs had become the first major bank in the US to open crypto options trading service in the country. It has taken upon the role of acting as the risk-taking principal party in these transactions.