The Ether-bitcoin (ETH/BTC) ratio has reached an “extremely undervalued” area in a movement that shows a historically bullish signal, but merchants who bet on a recovery of crisp ether (ETH) may want to stop.
According to data firm data in the Cryptoquant chain, the ETH/BTC market value to the value ratio (MVRV) has fallen to a minimum of several years to reach levels that have previously marked periods of performance greater than BTC.
The exchange rate for the two tokens, conventionally called a ratio, reached its maximum point above 0.08 at the end of 2021. The ETH/BTC ratio was 0.019 in the press hour, more than 75% from the highest records.
MVRV is a metric that compares the current market capitalization of a token with its capitalization made, or the value of each currency depending on the price that moved for the last time in the block chain. This effectively reflects the average cost base of all currencies in circulation.
But the configuration may not be so simple this time. The network activity remains flat and the nucleus use metrics such as transactions count and active addresses have seen little impulse since the last execution of Toro, said Cryptoquant.
The increase in the total ether supply is directly linked to the strong decrease in burned rates, as shown in the previous graph, which shows the activity of burns almost zero. The reason behind this change is the Dencun update, implemented in March 2024, which significantly reduces the transaction rates throughout the network, the firm said.
Ethereum’s network activity has been maintained a great flat since 2021, without sustained growth in use in the last three years. This stagnation echoes through key metrics, such as the volume of transactions and active addresses, which indicates that the Ethereum base layer has not experienced a significant expansion in the activity in the chain.
Meanwhile, the growth of layer 2 solutions, such as the referee and the base, has reached the coast of the main activity. This cannibalization dynamic reduces base layer rates and weakens the ETH value accumulation narrative.
Institutional demand is also cooling: “The demand of ETH investors as a performance and an institutional asset is weakening, as evidenced by the decrease in ETH and the lowest balances in the hands of ETFs and other investment vehicles,” Cryptoquant wrote.
“The total valued value has fallen from its historical maximum, while fund holdings continue to tend down, indicating a reduction in the confidence of traditional cryptographic participants and investors,” he added.
The amount of ETH stamped has decreased markedly from its historical maximum of 35.02 million ETH in November 2024 to around 34.4 million ETH, which suggests that investors can reallocate capital or seek more liquid positions in the middle of a less favorable market environment.
In addition, ETH balances in investment products have fallen by approximately 400,000 ETH since the beginning of February, highlighting a broader decrease in institutional demand.
Meanwhile, Bitcoin has continued to increase despite a macroeconomic environment, playing almost $ 100,000 before Thursday as its appeal as a safe asset grows among investors.
