Stretched Ethereum (ETH) Trades at a Discount, Suggesting Dismal Q1 Performance Could Be a Buying Opportunity

Key Takeaways:

* Fidelity Digital Assets’ report said that multiple Ethereum onchain metrics suggest ETH trades at a discount.

* The BTC/ETH market cap ratio is at mid-2020 levels.

* The BTC/ETH market cap ratio is at mid-2020 levels.

* Ethereum's layer-2 active addresses hit new highs at 13.6 million.

* Ethereum's layer-2 active addresses hit new highs at 13.6 million.

Fresh data from Fidelity Digital Assets is putting a cautiously optimistic spin on Ethereum’s dismal Q1 performance, which could be setting up an opportunity, according to the investment firm.

Fresh data from Fidelity Digital Assets is putting a cautiously optimistic spin on Ethereum’s dismal Q1 performance, which could be setting up an opportunity, according to the investment firm.

In its latest Signals Report, Fidelity noted that Ether (ETH) slipped 45% during Q1, wiping out it post-US election gains after peaking at $3,579 in January. The altcoin also saw a death cross in March, with the 50-day simple moving average (SMA) falling 21% below the 200-day SMA, reflecting bearish momentum. But, the investment firm noted that the short-term pain may swing in the altcoin’s favor.

Examining the MVRV Z-Score, which compares market value to realized value, it dropped to -0.18, entering the “undervalued” zone on March 9. Historically, such levels have marked market bottoms, and suggest that Ether “was looking cheap” compared to its “fair value.” Meanwhile, the Net Unrealized Profit/Loss (NUPL) ratio fell to 0, indicating “capitulation,” where unrealized profits equal losses, setting a neutral spot for holders.

Looking at the realized price, it sits at $2,020, 10% above the current price, showing that holders are in the red. While this trend is bearish, the firm noted that a minor 3% drop in realized price versus a 45% decline suggests short-term holders sold off, while long-term holders held firm, possibly stabilizing the base price. However, the company highlighted that in 2022, despite ETH price dipping below the realized price, it continued to decline further before recovery.

In terms of market cap, the firm noted that BTC/ETH market cap is at 0.13, reaching mid-2020 levels, and has been in a decline for 30 months.

Ethereum ecosystem engagement records fresh highs

Data from growthepie.xyz revealed that the number of unique addresses interacting with one or two layer 2 networks in the Ethereum ecosystem has hit a new all-time high of 13.6 million active addresses. The rate of active addresses is up 74% over the past week, highlighting the network's scalability and growing adoption.

Data from growthepie.xyz revealed that the number of unique addresses interacting with one or two layer 2 networks in the Ethereum ecosystem has hit a new all-time high of 13.6 million active addresses. The rate of active addresses is up 74% over the past week, highlighting the network's scalability and growing adoption.

Unichain, a new layer-2 protocol by Uniswap (CRYPTO: UNI), had the highest number of weekly active addresses with over 5.82 million, followed by Base and Arbitrum. The collective increase in active addresses led to a 58.74% surge in layer-2 dominance in the past seven days.

Unichain, a new layer-2 protocol by Uniswap (CRYPTO: UNI), had the highest number of weekly active addresses with over 5.82 million, followed by Base and Arbitrum. The collective increase in active addresses led to a 58.74% surge in layer-2 dominance in the past seven days.

Anonymous crypto trader CRG noted that ETH price recovered a position above the 12-hour Ichimoku cloud indicator for the first time since December 2024. The Ichimoku Cloud indicates an uptrend when the price is above the cloud and the cloud turns green, indicating bullish sentiment.