As ETH rallies by over 20%, the widely-tracked network-to-value (NVT) ratio of Ethereum drops to a three-month low, indicating compelling valuations. The NVT ratio measures Ethereum’s market capitalization in relation to the value of on-chain transactions processed on the network.
The seven-day average of the NVT ratio, which is calculated by dividing market capitalization by the value of on-chain transactions, reached 59.3, the lowest since November 19th, 2020, as per data from Glassnode.
The declining ratio suggests that the network is undervalued, unlike a rising ratio that indicates the opposite.
Similar to the price/earnings (P/E) ratio used in stock markets, the NVT ratio determines whether a cryptocurrency is cheap or expensive. With the recent surge, ETH has hit a six-month high of $1,784.
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