Undervaluation

Definition ∞ Undervaluation in financial markets occurs when an asset’s current market price is lower than its perceived intrinsic or fundamental value, suggesting it is trading at a discount. This condition can arise from various factors, including negative market sentiment, temporary setbacks, or a lack of understanding regarding the asset’s long-term potential. For digital assets, fundamental analysis often seeks to identify cryptocurrencies or tokens that are undervalued relative to their technological utility, network adoption, or development progress. It presents a potential opportunity for investors.
Context ∞ Crypto news frequently features analyses and opinions on digital assets believed to be experiencing undervaluation, often prompting discussions among investors. Reports might cite specific on-chain metrics, development milestones, or market sentiment shifts as reasons for an asset’s current price discrepancy. Identifying undervalued assets is a common strategy for market participants looking to capitalize on future price appreciation as the market corrects its perception.