- Ethereum is now extremely undervalued compared to BTC, the first time since 2019.
- However, supply pressure, weak demand, and flat activity could stall an ETH rebound.
A combined analysis of different Ethereum[ETH] metrics suggested that ETH was poised for potential gains soon, but its on-chain data hindered this outright historical repetition.
ETH has reached its most undervalued level relative to Bitcoin, as reflected in the ETH/BTC MVRV ratio—a trend last seen in 2019.
In previous cycles (2017, 2018, and 2019), similar conditions led to steep Ethereum rallies, where ETH outperformed BTC for months. These reversals were typically driven by speculative inflows and strong altcoin rotations.
This cycle, however, presents a different scenario.
Despite ETH’s undervaluation, structural headwinds have created uncertainty, limiting its ability to follow past mean-reversion trends.
Unlike previous years, the macro BTC narrative remains dominant, fueled by ETF flows and institutional buying.
Source: X
This divergence suggested that history may be indicating ETH upside, but its reversal would not necessarily follow the same aggressive trajectory unless the fundamentals became better.
Investors might be able to hedge on-chain signals with present market realities before searching for another ETH-dominated altseason.
What could hinder ETH’s outperformance of BTC?
Ethereum’s supply recently surpassed 120.7 million ETH, reaching a new all-time high.
This increase in supply signals potential selling pressure, especially without consistent burning activity or strong demand absorption.
In past cycles, supply tightening helped drive price growth, but this time, inflationary pressure could limit ETH’s upside compared to Bitcoin, as scarcity weakens.
With burned fees dropping significantly, ETH’s total supply is no longer decreasing.
Source: CryptoQuant
Moreover, network usage has also been largely stagnant since 2021. Key metrics like active addresses and number of transactions have not had sustainable growth. This meant user adoption and utility were plateauing.
With no on-chain activity explosion, it suggested ETH had minimal natural demand drivers that could lead to ETH outperformance against BTC in previous cycles.
On the investor front, institutional-grade and yield-bearing demand for ETH was showing signs of abating. Staked ETH increased at a slower rate, and ETFs and funds were holding fewer tokens.
Source: CryptoQuant
Under diminishing institutional confidence and uninspiring retail enthusiasm, Ethereum might not be able to replicate its previous outperformance against Bitcoin unless new catalysts emerge to reverse these structural drags.
Can massive outflows ignite a rebound?
Meanwhile, Ethereum last saw over 85,000 ETH withdrawn from Binance in one of the largest recent withdrawals. Historically, such giant withdrawals have commonly been preceded by bullish price moves due to low sell-side liquidity.
As soon as ETH regained the $1,900 threshold, this also sparked questions about whether whales were stocking up for the rebound.
The fewer tokens found in exchanges, the lower the selling pressure must be, and that could provoke a supply squeeze.
Source: X
But not all the big outflows assure a rally—some are just havens during uncertainty. The next few days might be critical in establishing whether this is an accumulation or merely caution.