The latest data in the chain shows that the second largest cryptocurrency for market capitalization, Ethereum, can be underestimated. Having witnessed a strong resurgence last week, Altcoin could be on the verge of an extended demonstration in the coming weeks.
Ethereum’s NVT relationship reaches a new low record
In a quick publication on the Cryptoquant platform, Crypto Analyst Cryptanchain reported that there has been a disproportionate increase in the volume of transactions with respect to ETH compared to its market capitalization.
The relevant indicator here is the Ethereum NVT (network value ratio to transactions) (30 -day SMA), which measures the relationship of Ethereum market capitalization at its daily volume of transactions for 30 days.
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Cryptanchain revealed that the 30 -day NVT mobile average recently reached its lowest point ever registered. As the analyst explained in the chain, this could suggest two things: first, that Ethereum’s Token is undervalued.
For the context, a low NVT reflects a very high transaction volume compared to a relatively low market capitalization. What this means is that the Ethereum network is being used a lot, but the price does not show its value as much as its use suggests. After this logic, one could conclude that the market is underestimating the utility of Ethereum.
The second indication of the historically low NVT is that the increase in the volume of transactions could be due to “temporary factors such as defi, NFT events or large capital movements.” According to the analyst, these temporal factors do not necessarily mean sustainable growth for the ETH price.
What to wait
Cryptanchain cited historical occurrences to explain the typical case where an NVT fund is the result of market undervaluation. In this case, it has been observed that the sharp NVT funds precede the bullish phases.
However, in what was a warning, the online expert mentioned that there have been cases in which NVT’s very low levels were accompanied by higher price decreases.
Seeing that Ethereum NVT is not alone at a mere low level, but in its historical minimum, the value of the token value seems more likely. Therefore, it is not out of discussion to wait for one more upward swing in the price of cryptocurrency.
Related reading: Ethereum at $ 6,800 for the end of the year? CME futures data show a registered institutional demand
However, with the possibility that a bullish phase does not necessarily remain in mind, investors may want to step cautiously. At the time of writing this article, the Token Ethereum is valued by approximately $ 4,670, which reflects an increase in prices of more than 4% in the last 24 hours.
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