Fidelity, a leading financial services company, recently launched a report on Ethereum (ETH) that sheds light on some key metrics to watch over the coming months at the cryptocurrency.
The report highlights several key indicators, including the 50-day and 200-day moving averages (MA), realized price, Net Unrealized Profit/Loss (NUPL) ratio, Market Value to Realized Value (MVRV) Z-Score, percent in profit, and the Pi Cycle indicators, all of which can provide valuable insights into market sentiment and potential price movements.
Ethereum is holding strongly above key support levels
According to the report, Ethereum has remained above key support levels, with the realized price serving as a strong support level since Jan. 10.
In addition, the NUPL ratio suggests that Ethereum is currently in a neutral zone, while the MVRV Z-Score indicates that the cryptocurrency’s market value is estimated to be just above the “fair” zone, potentially paving the way for a bull run or at least sideways price action, according to Fidelity.
Another interesting statistic highlighted in the report is the percentage of unique addresses making a profit, which is currently close to 66%. While this statistic has not touched the green zone since January 2020, it suggests that Ethereum owners may be using the cryptocurrency for trading, DeFi, staking, or buying other digital assets.
In addition, the Pi Cycle indicators, which are traditionally a good cycle top indicator, show that Ethereum is currently in a neutral zone. As the long-term moving average continues to track the sunken price downwards, this could soon pave the way for more volatility.
However, whether this volatility will be up or down remains to be seen and may depend on several macro factors.
ETH adoption on the rise
On the other hand, Fidelity’s report highlights that while the monthly active addresses and the number of monthly transactions decreased by 1%, the number of monthly new Ethereum addresses slowly increased by 9% in Q2 2023.
New addresses are defined as unique addresses that appear for the first time in a transaction. This momentum metric may not directly show network usage, but it does provide a clearer picture of Ethereum adoption.
The short-term moving average of new addresses appears to be moving above the longer-term moving average again, indicating that the number of new users joining the network is increasing. New and existing projects are likely to encourage new users and help drive this increase.
Another key metric highlighted in the report is the net release of new stock issued by the network minus burnt stock from transactions since The Merge.
This has led to a decline in supply for over five months now, with a net issuance of over -700,000 Ether. The report notes that this is important because, in theory, as Ethereum’s supply is destroyed, the relative ownership level of all remaining token holders increases.
At the time of writing, the price of ETH is at $1,849, which is down 2% in the past 24 hours. Similar to Bitcoin’s situation, Ethereum has also lost its 50-day MA, which currently stands at $1,869.
If the market continues to fall, ETH can anticipate several key support levels that could help prevent a further bearish trend.
The closest support level is at $1,840 followed by another support level at $1,792. However, the most crucial support floor is the 200-day MA, which sits at $1,780. This will be a major factor in determining who will dominate in the coming months.
Featured image of Unsplash, chart from TradingView.com
