The latest chain data show that the second largest cryptocurrency by market capitalization, Ethereum, could currently be undervalued. Having attended a strong resurgence during last week, Altcoin could be on the verge of a prolonged rally in the coming weeks.
The NVT report of Ethereum reaches a new low record
In a post Quicktake on the cryptocurrency platform, Crypto Analyst Cryptonchain reported that there had been a disproportionate increase in the volume of transactions concerning ETH compared to its market capitalization.
The relevant indicator here is Ethereum NVT (network value ratio / transactions) (SMA at 30 days), which measures the Ethereum market capitalization ratio at its daily transaction volume over a 30 -day period.
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Cryptonchain revealed that the 30 -day Mobile Mobile NVT recently reached its lowest point ever recorded. As the chain analyst explains, this could suggest two things: first, that the Ethereum token is undervalued.
For the context, a low TNV reflects a very high volume of transactions compared to a relatively low market capitalization. This means that the Ethereum network is strongly used, but the price does not show as much as its use suggests. Following this logic, we could conclude that the market currently underwears the usefulness of Ethereum.
The second indication of the historically low TNV is that the increase in the volume of transactions could be due to “temporary factors such as DEFI, NFT events or significant capital movements”. According to the analyst, these temporary factors do not necessarily mean sustainable growth for the price of ETH.
What to expect
Cryptonchain cited historical occurrences to explain the typical case where a NVT background is the result of a market undervaluation. In this case, it was observed that the sharp NVT stockings precede the bullish phases.
However, in what was a warning, the online expert mentioned that there were cases where very low TNV levels were accompanied by new price reductions.
Seeing that Ethereum NVT is not only at a simple low level, but at its bottom all time, it seems more likely that the market underwears the value of the token. It is therefore not out of the question to expect a swing more upwards the price of cryptocurrency.
Reading related: Ethereum at $ 6,800 by the end of the year? Future CME data shows a recorded institutional request
However, with the possibility that a bullish phase did not necessarily follow in mind, investors might want to walk with caution. When writing these lines, the Ethereum token is estimated at around $ 4,670, reflecting a price increase of more than 4% in the last 24 hours.
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