Ethereum Price Is Far Above Its Value, Inflation Is Peaking: Fidelity Report

Giant financial company Fidelity presented a report on the cryptocurrency market, highlighting Ethereum (ETH).

Fidelity stated that the Ethereum network experienced its highest inflation period in the second quarter. The report highlighted that layer-2 transactions have increased by 20% since the Dencun update in March.

According to a report published by Fidelity Digital Assets last week, the Ethereum blockchain added 110,000 Ethereum (ETH) to its total supply in the last quarter, reaching an annual inflation rate of 0.37%.

Analysts Daniel Gray and Max Wadington said dramatic fluctuations in Ethereum supply are not expected in the short to medium term, but inflationary quarters could become more frequent with increasing interest in lower-fee layer-2 platforms and demand for staking.

The report stated that the number of validators of the network has increased by 5% since April, and the new re-staking application could further increase staking demand.

Ethereum price up 67% Layer-2s are separate blockchains built on top of the underlying blockchains, namely layer-1s. The report stated that Ethereum is currently trading 67% above its so-called “realized price.” Fidelity noted that this could indicate “investors are more comfortable allocating Ethereum relative to 2021 highs.” Stating that after a strong start to the year, all key indicators of the Ethereum base layer declined in the second quarter, Fidelity noted that new addresses decreased by 16% monthly, active addresses decreased by 14%, and the number of transactions decreased by 9%. Still, as the layer-2 ecosystem continues to develop, “The impact of tier-1 metrics on valuation is expected to diminish,” he added.