Key Points:
- Fidelity Digital Assets' report indicates multiple Ethereum on-chain metrics suggest ETH is trading below its valuation.
- BTC/ETH market capitalization ratio returned to mid-2020 levels.
- Ethereum's Layer 2 network active addresses reached a new high of 13.6 million.
New data from Fidelity Digital Assets suggests a cautiously optimistic view of Ethereum, indicating that its poor performance in the first quarter might be an opportunity. According to their latest 'Signals Report', Ethereum (ETH) dropped 45% in the first quarter, erasing gains achieved after the US election, following a peak of $3,579 in January.
ETH's price experienced a death cross in March, with the 50-day Simple Moving Average (SMA) declining 21% below the 200-day SMA, reflecting bearish momentum. However, Fidelity noted that short-term pain might turn favorable for Ethereum.
The investment company pointed out that the MVRV Z-Score (comparing market value to realized value) dropped to -0.18 on March 9th, entering the "undervalued" zone. Historically, this level often marks market bottoms, indicating Ethereum looks "cheaper" compared to its "fair value". The Net Unrealized Profit/Loss (NUPL) ratio also dropped to 0, signaling a "capitulation" state where unrealized profits equal losses, suggesting holders are in a neutral position.
Ethereum's MVRV Z-score
Source: Fidelity Digital Assets Signal report
ETH's actual price averaged $2,020, 10% higher than current value, indicating unrealized losses for holders. While this trend seems bearish, the company noted that the actual price only slightly decreased by 3% compared to the 45% drop, suggesting short-term holders have sold while long-term holders remain firm, potentially stabilizing the base price.
However, the company emphasized that in 2022, despite ETH's price falling below actual price, it continued to decline further before rebounding.
Fidelity also cited Ethereum's market cap ratio with Bitcoin at 0.13, at mid-2020 levels, having declined over 30 months.
Ethereum/Bitcoin Market Cap Ratio
Source: Fidelity Digital Assets Signals report
Ethereum Ecosystem Engagement Reaches New High
Data from growthepie.xyz shows unique addresses interacting with Ethereum's Layer 1 or Layer 2 networks reached a historic high of 13.6 million. Active address proportion increased 74% in the past week, indicating network scalability and growing adoption.
Weekly Interactions with Ethereum and Layer 2 Networks
Source: growthepie.xyz
Uniswap's new Layer 2 protocol Unichain leads with over 5.82 million weekly active addresses, surpassing Base and Arbitrum. The collective increase in active addresses boosted Ethereum's Layer 2 network dominance by 58.74% in the past seven days.
Anonymous crypto trader CRG noted that ETH price has first recovered above the 12-hour Ichimoku Cloud since December 2024. The Ichimoku Cloud indicates an upward trend when price is above the cloud and the cloud turns green, suggesting bullish sentiment.
Ethereum 12-hour Analysis by CRG
Source: X.com
This article does not contain investment advice or recommendations. Every investment and trading activity involves risks, and readers should conduct their own research when making decisions.
