Ethereum appears to be significantly undervalued relative to Bitcoin, according to the latest data, raising expectations for potential upside. However, traders may need to exercise caution, as several factors—including rising supply, flat demand, and weakened burn mechanisms—pose risks to Ethereum’s short-term price outlook.
CryptoQuant’s latest analysis of the ETH/BTC ratio shows it has dropped to levels not seen in years. The market value to realized value (MVRV) ratio, which compares the current market cap to the value at which tokens were last moved on the blockchain, has fallen sharply, signaling that Ethereum is undervalued. The ETH/BTC ratio peaked at 0.08 in late 2021 but has since declined by over 75%, now sitting at 0.019, its lowest point in years.
Historically, such low ratios have signaled an opportunity for Ethereum to outperform Bitcoin, but the situation is not as clear-cut this time. Ethereum’s network activity has remained largely stagnant, with key metrics like transaction volume and the number of active addresses showing little growth since the last bull market. This lack of momentum in Ethereum’s core network raises concerns about its long-term potential for growth.
The rising supply of Ethereum is another obstacle. A key feature of Ethereum’s economic model is the burning of transaction fees, which helps reduce the circulating supply. However, the Dencun upgrade in March 2024 significantly reduced transaction fees, which in turn led to a sharp decline in the amount of ETH being burned. This drop in burn activity means that Ethereum’s supply is expanding faster than previously expected, weakening its deflationary pressure.
The rise of Layer 2 solutions like Arbitrum and Base has also shifted activity away from Ethereum’s mainnet, reducing transaction volume on the base layer and lowering the demand for ETH. This trend is contributing to the reduction in base-layer fees and further complicates Ethereum’s value proposition as the primary platform for decentralized finance (DeFi) and other applications.
Institutional interest in Ethereum is cooling, as evidenced by the decline in the amount of ETH staked. The total amount staked has fallen from an all-time high of 35.02 million ETH in November 2024 to approximately 34.4 million ETH today. This suggests that institutional investors are becoming more cautious and reallocating their capital amid a more uncertain market environment.
Additionally, ETH held in investment products like ETFs has decreased by about 400,000 ETH since February 2025, reflecting a broader trend of reduced institutional demand for Ethereum.
Meanwhile, Bitcoin continues to gain momentum, recently approaching the $100,000 mark, as investors flock to the asset as a safe haven amid macroeconomic instability.
