Ethereum, the world’s second-largest cryptocurrency by market capitalization, is drawing attention after fresh on-chain data suggested it may be undervalued at its current price levels. Trading around $4,670 as of now, the asset has posted a 4% gain in the past 24 hours. Yet analysts say the real story lies beneath the surface.
Ethereum’s NVT Ratio Hits Record Low
According to a QuickTake post on CryptoQuant by analyst CryptoOnchain, Ethereum’s NVT (Network Value to Transactions ratio) on a 30-day moving average has dropped to its lowest level ever recorded. The NVT compares Ethereum’s market capitalization with its transaction activity, offering a lens into whether the token is overpriced or undervalued.
A low NVT indicates strong transaction activity relative to market cap. In Ethereum’s case, this means the blockchain is experiencing heavy usage, but its price does not fully reflect that demand. Such scenarios often hint at undervaluation, suggesting the market may not be pricing Ethereum’s utility appropriately.
Possible Explanations for the Surge in Activity
While the record-low NVT points to undervaluation, CryptoOnchain cautioned that temporary drivers could be at play. Surges in activity can stem from short-lived factors such as spikes in DeFi usage, NFT drops, or large capital transfers. These events might inflate transaction volume without guaranteeing sustained growth for ETH’s price.
Nevertheless, historical patterns show that sharp NVT bottoms often precede strong bullish rallies. When Ethereum’s network activity runs high against a relatively modest market cap, investors usually revisit the asset with renewed optimism.
What the Market Could Expect
CryptoOnchain emphasized that NVT signals should not be taken in isolation. While past bottoms have paved the way for rallies, there have been instances where Ethereum prices slipped further even with extremely low NVT ratios. This dual outcome highlights the importance of cautious optimism among traders and long-term holders.
Still, the unprecedented depth of the current NVT drop leans toward the interpretation of undervaluation. If history repeats itself, Ethereum could be on the verge of a larger rally in the coming weeks. Speculation is already circulating about a potential climb toward $6,800 by year’s end, supported by institutional interest in CME futures.
Investor Outlook
The key takeaway is balance. On-chain data makes a compelling case that Ethereum may be underpriced given its level of network activity. Yet the possibility of short-term corrections remains. Traders will need to weigh historical precedent against present-day volatility.
For now, Ethereum continues to trade near $4,700, building momentum while analysts debate whether the current market is missing the full value of its network.
