Ethereum Trading Value Below Fair Price, Research Report Shows
A recent research report has examined the fair value of Ethereum, revealing that the cryptocurrency has been trading below its true price. The report analyzes Ethereum’s value by evaluating its trading activities and active addresses over the years. According to the report, Ethereum is currently trading at a 27% discount below fair value.
Valuation Model and Active User Base
The report utilizes the Metcalfe law-centric valuation model, which factors in the active user base on Ethereum’s scaling networks to determine its fair value. The analyst states that excluding active user bases would result in Ethereum’s valuation being significantly lower than its fair value of $275 billion.
Current Market Performance
Based on the research findings, Ethereum should be trading at around $2,300 with a market cap of $275 billion. However, it is currently priced at $1,637 with a market capitalization of $197.62 billion.
Evaluating Value Layers
The research firm also evaluates Ethereum’s commodity value layer by analyzing the amount of ETH used for daily crypto transactions. It highlights that transaction fees have an annual run rate exceeding $1.6 billion. Additionally, it considers Ethereum’s equity value, noting that over 3.5 million ETH ($5.8 billion) has been burned by EIP-1559. Lastly, the report examines Ethereum’s network value layer using Metcalfe’s law approach.
The Future of Ethereum
Ethereum has experienced significant declines recently, potentially setting back its growth by several years. The native token Ether (ETH) faced a critical support level of $1,530 in September but has since made a slight recovery to a more stable position.
Hot Take: Ethereum Trades Below Fair Value, Impact on the Ecosystem
Ethereum’s current trading below fair value, as revealed by the research report, raises concerns about the impact on the ecosystem. The cryptocurrency’s price has experienced a decline, indicating potential setbacks for its growth. However, with ongoing developments and market fluctuations, it remains to be seen how Ethereum will recover and whether it can regain its fair value in the future.
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