TL;DR
- Fidelity Digital Assets claims that several on-chain indicators suggest Ethereum is experiencing a “capitulation” phase, which implies that its current market price could be below its intrinsic value.
- The market cap ratio between Bitcoin and Ethereum has dropped to levels not seen since 2020.
- Activity on Ethereum’s layer-2 networks has hit a new record, with 13.6 million active addresses signaling increasing adoption.
A recent report by Fidelity Digital Assets has sparked a wave of optimism among crypto supporters. According to the investment firm, Ethereum is likely undergoing a capitulation phase, a classic stage in bear markets when weaker investors exit the market, potentially paving the way for a recovery. This interpretation suggests ETH could be trading below its fair value, presenting a strategic window of opportunity for long-term thinkers.
One of the key indicators highlighted in the report is the MVRV Z-Score, which measures the deviation between market value and realized value of an asset. This metric dropped to -0.18 on March 9, entering a zone that has historically coincided with market bottoms.
Adding to this, the NUPL metric (Net Unrealized Profit/Loss) fell to zero, a common capitulation signal, indicating that most investors are no longer in profit but also not at significant loss, marking a neutral but potentially promising point.
The report also emphasizes that Ethereum’s “realized price”, the average price at which current holders acquired their ETH, is still higher than the current market value. This means a significant portion of holders are sitting on unrealized losses, while short-term traders likely already sold off. Fidelity interprets this as a stabilizing dynamic, where long-term holders could be building a new price foundation for ETH.
Layer-2 Activity and Bullish Potential
Beyond the technical indicators, Ethereum’s ecosystem continues to display strong fundamentals. According to data from GrowThePie, the number of unique addresses interacting with layer-2 scalability solutions has reached an all-time high of 13.6 million. Among these networks, Unichain, developed by Uniswap, is leading the surge, boasting over 5.8 million weekly active users, surpassing major players like Arbitrum and Base.
This wave of activity highlights that despite market turbulence, Ethereum remains preferred platform for decentralized applications. Furthermore, technical analysts such as CRG have noted that ETH has climbed above key indicators like the Ichimoku cloud on the 12-hour chart for the first time in months, often interpreted as a signal of an emerging uptrend. In a context where network fundamentals remain robust, many investors are beginning to ask whether this is a rare market opportunity that the majority has yet to fully recognize.
