As Ethereum’s indigenous cryptocurrency, Ether (ETH), rallies over 20%, a blockchain metric
suggests that the cryptocurrency ETH is currently being traded at attractive prices. According to blockchain analytics firm Glassnode, Ethereum’s (NVT) ratio, which computes the crypto market capitalization concerning the worth of on-chain transfers executed on the fundamental blockchain, has dropped to a value of 59.3. This value is the lowest recorded since November 19.
The NVT ratio’s decline indicates that the network is undervalued, which has implications for Ethereum’s future prospects. A higher ratio implies a slower rate of growth of on-chain transactions related to the crypto’s price, which indicates an overvalued network. In contrast, a lower ratio implies that the network is undervalued, which presents an opportunity for investment.
Similar to the widely used price-to-earnings ratio in the stock market that evaluates if a share value is overpriced or underpriced, the NVT ratio measures whether the network of Ethereum is overvalued or undervalued.
Therefore, the current trend suggests that Ether is trading at a compelling valuation, which could be an excellent opportunity for investors. Ether has witnessed a significant surge of above 20% since last Friday, the prices surged to $1,784, marking a peak in the past six months, according to CoinDesk data. This rally is noteworthy and highlights the increasing demand for Ether among investors.
The NVT ratio is an essential metric for investors and traders alike. It offers insights into the underlying fundamentals of a cryptocurrency’s network and helps identify investment opportunities. The decline in Ethereum’s NVT ratio presents a compelling investment opportunity, especially for those looking to invest in a leading smart-contract blockchain and the second-largest cryptocurrency by market capitalization.
