Fidelity Backs Ethereum: Wall Street’s Biggest Players Bet on Crypto No. 2

Leading financial services provider Fidelity has recently issued a reports on Ethereum (ETH) which highlights some key metrics to keep an eye on for the cryptocurrency in the coming months.

The report highlights several important indicators, including 50-day and 200-day moving averages (MAs), realized value, net unrealized profit/loss (NUPL) ratio, market value to realized value (MVRV) Z-score, percentage in profit and pie cycle indicators, all of which can provide valuable insight into market sentiment and potential price movements.

Ethereum Strengthens Above Key Support Levels

According to the report, Ethereum has remained above key support levels, with its actual price acting as a strong support level since January 10.

Additionally, the NUPL ratio suggests that Ethereum is currently in a neutral zone, while the MVRV Z-score indicates that the cryptocurrency’s market capitalization is projected to hover just above the “reasonable” zone, potentially setting the stage for bullish or at least sideways price action, according to Fidelity.

Another interesting metric highlighted in the report is the percentage of unique addresses in profit, which currently stands at around 66%. While this metric hasn’t 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.

Furthermore, the Pie cycle indicator, which has historically been a good cycle top indicator, is showing that Ethereum is currently in neutral territory. As the long-term moving averages continue to follow the price dips to the downside, this could set the stage for more volatility soon.

However, whether this volatility will be upwards or downwards remains to be seen and may depend on various macro factors.

ETH adoption is on the rise

On the other hand, Fidelity’s report highlights that while monthly active addresses and monthly transaction numbers declined by 1%, the number of monthly new Ethereum addresses gradually increased by 9% in Q2 2023.

New addresses are defined as unique addresses that appear for the first time in a transaction. This metric for speed may not show direct network usage, but it shows a clear picture of Ethereum adoption.

The short-term moving average of new addresses is shown rising above the longer-term moving average, indicating that the rate of new users joining the network is increasing. New and existing projects are likely encouraging new users and helping drive this growth.

Another important metric highlighted in the report is the net issuance of new supply issued by the network after subtracting the supply burned from transactions since The Merge.

This has resulted in a reduction in supply over the past five months, with a net output of over -700,000 Ether. The report states that this is important because, in theory, as soon as the supply of Ethereum is destroyed, it inflates the ownership level relative to all remaining token holders.

At the time of writing, ETH is priced at $1,849, down 2% within the past 24 hours. Similar to the situation with Bitcoin, Ethereum has also lost its 50-day MA, which is currently located at $1,869.

If the market continues to decline, ETH can look forward to several key support levels that could help prevent further bearish trends.

The nearest support is located at $1,840, followed by another $1,792 support. However, the most important support level is the 200-day MA, located at $1,780. This will be a key factor in determining who will dominate the coming months.

Featured Image from Unsplash, Chart from Tradingview.com