PAVA Indicator: Morgan Stanley’s New Tool to Divide ETH Users as ‘Believers’, ‘Speculators’

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.

PAVA Indicator: Morgan Stanley’s New Tool to Divide ETH Users as ‘Believers’, ‘Speculators’

Photo Credit: Facebook/ Morgan Stanley

Wall Street banks like Morgan Stanley and Goldman Sachs are delving deeper in crypto

Highlights
  • ETH speculations will be calculated using PAVA tool
  • PAVA tool better at identifying market lows
  • Morgan Stanley is among Wall Street banks exploring crypto

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.


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Radhika Parashar
Radhika Parashar is a senior correspondent for Gadgets 360. She has been reporting on tech and telecom for the last three years now and will be focussing on writing about all things crypto. Besides this, she is a major sitcom nerd and often replies in Chandler Bing and Michael Scott references. For tips or queries you could reach out to her at RadhikaP@ndtv.com. More
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