Ethereum (ETH) Attracting ETF Buyers Amid Anticipated Rally: CryptoQuant Reports on Its Undervalued Status
ETH has quietly entered a historically rare phase, as one market signal indicates it is significantly undervalued compared to Bitcoin (BTC). According to a new report by CryptoQuant, this insight derives from Ethereum’s ETH/BTC Market Value to Realized Value (MVRV) metric, which gauges relative valuation based on market sentiment and historical trading patterns. Historically, when this indicator reaches similarly low levels, ETH has delivered notable gains and outperformed BTC.
Investors are taking notice, as demand for the ETH ETF has surged. The ETH/BTC ETF holdings ratio has seen a sharp increase since late April, according to data from CryptoQuant. This shift in allocation signifies that institutional investors expect ETH to outperform BTC, possibly influenced by the recent Pectra upgrade or a more favorable macroeconomic environment.
The ETH/BTC price ratio has already rebounded 38% from its lowest point since January 2020, indicating that investors and traders believe the bottom is in and that an “alt season” may be on the horizon. This sentiment aligns with observations from various market participants.
March Zheng, General Partner at Bizantine Capital, noted that traders should remember that ETH has historically acted as the primary on-chain altcoin indicator for risk-on behavior, with significant upticks often leading to broader altcoin rallies.
On-chain data further supports this optimistic outlook. Last week, ETH’s spot trading volume relative to BTC surged to 0.89, the highest level since August 2024, indicating renewed interest from investors. A similar trend was observed between 2019 and 2021 when ETH outperformed BTC fourfold.
CryptoQuant also highlighted that ETH exchange deposits, typically seen as indicative of selling pressure, have dropped to their lowest relative levels since 2020. This suggests that investors are anticipating higher prices in the near future.
For now, confirmation will depend on ETH decisively breaking above its key 365-day moving average against BTC. With compelling undervaluation, increasing institutional interest, and declining selling pressure, ETH appears well-positioned for significant upside in the upcoming months.
However, one area where ETH is still trailing is network activity, as pointed out in a prior CryptoQuant report. Without a greater number of users engaging with Ethereum, it will be challenging for the token’s price to make significant progress.
