By Michael Scott
Ethereum is poised for a rebound as on-chain activity and adoption metrics suggest the potential to shake off the deepest undervaluation zone.
Ethereum has slid into a fundamentally mispriced zone following the month-long decline of 16.81%. The path to one of the deepest undervaluation zones is unsurprising, considering the second-largest crypto by market value has consistently trailed Bitcoin since 2022 Q4. The decline has left the ETH/BTC values suffering a freefall from 0.060159 BTC on Feb 26, 2024, to change hands at 0.027837 BTC – down 53% over the past 12 months, per CoinGecko data.
Ethereum Contrasting Performance
Scrutiny into the BTCUSD chart shows Bitcoin is up by 3.04%, contrasting Ether’s downtrend, leaving the altcoin king 19.8% down since 2025 began. The contrasting fortune is evident in ETH’s struggles to surpass its all-time high price of $4891, attained in November 2021.
BTC leveraged the bullish sentiment to break the $100,000 barrier. The upward momentum elevated BTC to a fresh peak above $109,000 last month. ETH has struggled to match its ATH and drifted away from its peak. Ethereum trades at a 45.45% discount from the price peak in a widening divide as Bitcoin is only 11.49% off ATH hit during President Donald Trump’s inauguration on Jan 20.
The disparity in the performance of exchange-traded funds is a testament to ETH trailing Bitcoin. Scrutiny into the SoSoValue data illustrates the net assets within the US-based Bitcoin ETFs, approximately $115 billion. This translates to 5.9% of the pioneer digital asset’s market cap, unlike in ETH ETFs, where capital locked up is merely 3.1%, which is equivalent to $10.20 billion.
Ether Rebound?
Bitwise considers Ether mispriced, citing adoption and on-chain activity metrics. The asset manager points to the historical data to hint that Ether is poised to rebound this month.
Bitwise analysts consider Ethereum to be locked within the deepest undervaluation zones. A senior researcher in Bitwise Europe, Andre Dragosch, opines that Ethereum’s fundamental value is hardly reflected in its current price.
The analysts attribute Ether’s disappointing performance to the accelerated interest in artificial intelligence (AI), real-world assets (RWAs) tokenization, and meme coins. Such areas are reaping lower transaction costs, thus disadvantaging Ethereum for its congested and expensive network.
Dragosch considers the continued adoption of Layer 2 scaling solutions to involve fragmented activity owing to multiple ecosystems. Such limits value that the Ethereum base layer directly captures.
The researcher considers the extensive utilization of ETH in trading pairs across the digital assets ecosystem to have worsened the situation. It leaves ETH vulnerable to persistent downward pressure emerging from arbitrage when price rallies.
Bold Outlook for ETH
Bitwise is bullish that historical data indicates ETH is poised for imminent recovery. This projection is supported by on-chain metrics showing high buying volumes among US retail investors.
CryptoQuant analysts observe the declining exchange reserve for ETH often precedes major rallies. This bullish pattern indicates retail investors are buying off this altcoin. Notably, the CryptoQuant data illustrates a declining supply of approximately 714,129. The significant decline illustrates the rising demand as investors purchase Ether in huge quantities and later move into private wallets.
The exchange reserve signifies the asset amount available from the crypto exchanges. A look at the Coinbase Premium Index traces the demand for US-based retail investors. The index tracks the buying and selling activity on the crypto exchange Coinbase relative to Binance.
Positive readings show increased accumulation by the US-based investors. For context, the present index value is at 0.0255, thus within the green region. Further accumulation by these US investors coincidentally as other market participants could elevate ETH’s price.
The surge in buying volume is evident in the Taker Buy Sell ratio rise from 0.967 the previous day to 1.084 — a milestone last witnessed on Jan 3. Considering that this ratio is above 1 affirms the heightened buying activity within the derivatives space, reinforcing the bullish sentiment.
With the active purchase by US investors in the spot market coinciding with bullish sentiment within the derivatives space, the ETH rally is gaining momentum.
Editorial credit: Oporty786 / Shutterstock.com