Fidelity Report: Multiple on-chain metrics indicate ETH price is undervalued

Original author:Biraajmaan Tamuly

Original translation: TechFlow

Key points:

• The Fidelity Digital Assets report states that multiple on-chain indicators indicate that ETH is trading below valuation.

• The BTC/ETH market cap ratio returns to mid-2020 levels.

• The number of active addresses on Ethereum's Layer 2 network reached a new high, reaching 13.6 million.

New data from Fidelity Digital Assets suggests cautious optimism about Ethereum, suggesting that its poor performance in the first quarter could be an opportunity. According to their latest Signals Report , Ethereum (ETH) fell 45% in the first quarter, erasing its earnings after the U.S. election, after reaching a peak of $3,579 in January.

The price of Ether saw a death cross in March, with the 50-day simple moving average (SMA) down 21% from the 200-day SMA, reflecting bearish momentum. However, Fidelity notes that short-term pain may turn toward good for Ethereum.

The investment company pointed out that MVRV Z-Score (comparison of market value and actual value) fell to -0.18 on March 9, entering the "undervalued" range. Historically, this level has often marked the bottom of the market, indicating that Ethereum “looks cheaper” than its “fair value.” The net unrealized profit/loss (NUPL) ratio also drops to 0, indicating a “surrender” state, i.e. unrealized profit equals a loss, implying that the holder is in a neutral position.

Ethereum's MVRV Z-score

Source: Fidelity Digital Assets Signal report

The actual price of ETH is on average at $2020, 10% higher than its current value, showing that holders face unrealized losses. While this trend is bearish, the company noted that the actual price fell only slightly by 3% compared to the 45% decline, indicating that short-term holders have sold out while long-term holders hold firmly, possibly stabilizing the underlying price.

However, the company stressed that in 2022, it continued to fall further before the rebound, although the ETH price fell below its actual price.

Fidelity also cites Ethereum to Bitcoin’s market cap ratio of 0.13, at mid-2020 levels and has been down for 30 months.

Ethereum/Bitcoin Market Cap Ratio

Source: Fidelity Digital Assets Signals report

Ethereum ecosystem engagement hits a record high

Data from growthepie.xyz shows that the number of unique addresses interacting with layer one or two networks in the Ethereum ecosystem reached an all-time high of 13.6 million. The proportion of active addresses has risen 74% over the past week, meaning network scalability and growing adoption.

Weekly interaction between Ethereum and Layer 2 network

Source: growthepie.xyz

Uniswap's new layer 2 protocol, Unichain, leads with more than 5.82 million weekly active addresses, surpassing Base and Arbitrum. The collective increase in active addresses has led to Ethereum's layer 2 network dominance increasing by 58.74% in the past seven days.

Anonymous crypto trader CRG noted that ETH prices have recovered to above the 12-hour Ichimoku cloud metric for the first time since December 2024. Ichimoku Cloud shows that when the price is higher than the cloud and the cloud turns green, it shows an upward trend, indicating bullish sentiment.

Ethereum 12-hour analysis provided by CRG

Source: X.com

This article does not contain investment advice or recommendations. Every investment and trading behavior involves risks and readers should conduct research on their own when making decisions.