CryptoQuant analysts have identified Ethereum (ETH) as the most undervalued asset relative to Bitcoin (BTC) since 2019. Historical trends suggest such periods often precede significant ETH price rallies, making this a critical moment for investors.
Key Factors Influencing Ethereum's Valuation
1. Supply and Demand Dynamics
- Record-High ETH Supply: The total ETH supply has surged to over 120.7 million, marking a shift from deflationary post-Merge expectations back to inflationary issuance.
- Dencun Update Impact: Reduced transaction fees lowered Ethereum’s burn rate to near zero, accelerating supply growth.
2. Network Activity Stagnation
- Metrics like transactions and active addresses show no sustained growth since 2021.
- Declining staking volumes and shrinking investment funds reflect waning investor confidence.
3. Spot Trading Trends
- Reduced spot trading volumes may signal decreased market volatility.
- While lower volumes could ease selling pressure, analysts warn ETH may not have bottomed yet.
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Ethereum’s Current Market Position
As of analysis, ETH trades near $1,950, a pivotal level for investor decisions. Experts urge caution but highlight potential long-term opportunities.
FAQs
Why is Ethereum undervalued against Bitcoin?
Ethereum’s supply growth, stagnant network activity, and declining investor interest have widened its valuation gap with Bitcoin—the first such disparity since 2019.
Could Ethereum recover soon?
While past undervaluation phases preceded rallies, current weak demand and inflationary supply suggest recovery may take time.
What does reduced spot trading volume indicate?
Lower volumes may reduce short-term volatility but don’t guarantee a price floor. Investors should monitor macroeconomic and on-chain signals.
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Key Takeaways
- ETH/BTC undervaluation mirrors 2019 conditions, a historical bullish precursor.
- Inflationary supply and low demand pose near-term challenges.
- Strategic patience is advised; monitor on-chain data for turnaround signals.