Ether (ETH) Price Review: Ether-Bitcoin Ratio Reaches Positive Territory, Yet Exercise Caution

The ether-bitcoin (ETH/BTC) ratio has reached an “extremely undervalued” zone, signaling a historically bullish trend. However, traders anticipating a sharp ether (ETH) recovery may want to reconsider their positions. According to data from on-chain analytics provider CryptoQuant, the ETH/BTC market value to realized value (MVRV) ratio has dropped to multi-year lows, reaching levels that have previously indicated periods of ETH outperformance against BTC. The exchange rate for the two tokens peaked above 0.08 in late 2021, with the ETH/BTC ratio currently at 0.019, down more than 75% from record highs.

MVRV is a metric that assesses a token’s current market cap in relation to its realized capitalization, reflecting the average cost basis of all coins in circulation. However, the situation may not be straightforward this time. Network activity has remained flat, and core metrics such as transaction count and active addresses show little momentum since the last bull run.

The rise in ether’s total supply is linked to a significant drop in fees burned, with burn activity nearing zero. This change is attributed to the Dencun upgrade implemented in March 2024, which has notably decreased transaction fees across the network. Ethereum’s network activity has remained largely stagnant since 2021, lacking sustained growth over the past three years, as reflected in key metrics such as transaction volume and active addresses.

Simultaneously, the growth of Layer 2 solutions like Arbitrum and Base has impacted mainnet activity, creating a dynamic that reduces base layer fees and weakens ETH’s value accrual narrative. Institutional demand appears to be cooling as well, with “Investor demand for ETH as a yield and institutional asset weakening, evidenced by declining staked ETH and lower balances held by ETFs and other investment vehicles,” according to CryptoQuant.

The total value staked has decreased from its all-time high, with fund holdings continuing to trend downward, indicating reduced confidence from crypto-native participants and traditional investors. The amount of ETH staked has notably declined from its peak of 35.02 million ETH in November 2024 to approximately 34.4 million ETH, suggesting investors may be reallocating capital or opting for more liquid positions in a less favorable market environment. Additionally, ETH balances in investment products have dropped by about 400,000 ETH since early February, reflecting a broader decline in institutional demand.

Meanwhile, bitcoin has continued to rise, touching nearly $100,000 earlier on Thursday, as its appeal as a safe-haven asset grows among investors.