Undervalued Ether Catching Eye of ETF Buyers as Rally Inbound: CryptoQuant
A recent CryptoQuant report reveals Ethereum (ETH) is significantly undervalued against Bitcoin (BTC), reaching a price ratio unseen since 2019. This undervaluation is highlighted by the ETH/BTC Market Value to Realized Value (MVRV) metric, a key indicator of relative valuation, market sentiment, and historical trading patterns. Historically, such low MVRV levels have preceded substantial ETH gains and outperformance against BTC.
This observation is corroborated by a surge in demand for ETH ETFs. Data from CryptoQuant shows a sharp increase in the ETH/BTC ETF holdings ratio since late April, indicating institutional investors anticipate ETH’s outperformance. This bullish sentiment may be driven by the recent Pectra upgrade or a more favorable macroeconomic climate. The ETH/BTC price ratio has already rebounded 38% from its January 2020 low, suggesting a potential market bottom and the possibility of an imminent “alt season.”
This aligns with insights from market participants like March Zheng, General Partner of Bizantine Capital, who points to ETH as a key on-chain indicator for risk-on sentiment, with its price increases often triggering broader altcoin rallies. On-chain data supports this optimism. ETH spot trading volume relative to BTC hit its highest point since August 2024 last week (0.89), demonstrating renewed investor interest. A similar trend between 2019 and 2021 saw ETH outperform BTC fourfold. Furthermore, ETH exchange deposits, usually indicative of selling pressure, have fallen to their lowest relative level since 2020, suggesting expectations of future price increases.
Confirmation of this bullish outlook depends on ETH decisively breaking above its 365-day moving average against BTC. However, the combination of compelling undervaluation, growing institutional interest, and reduced selling pressure positions ETH for substantial upside potential in the coming months.
Despite this positive outlook, a crucial factor remains: network activity. A previous CryptoQuant report highlighted Ethereum’s lagging network activity. Increased user engagement on the Ethereum network is essential for sustained price growth and achieving significant price appreciation.
