ETH Dips Into Undervaluation Zone, Is Altseason Around the Corner?

Ethereum’s price metrics are flashing signals that suggest that the long-awaited altcoin season (altseason) may be around the corner.

According to a report by the market analytics platform CryptoQuant, the relative price of ether (ETH) compared to bitcoin (BTC) may have seen the bottom for this cycle. Previously, such low levels have been followed by periods where ETH significantly outperformed BTC, triggering a broader altcoin rally.

ETH Recovers From Undervalued Zone

In the last seven days, the ETH/BTC price ratio has surged 38% from its lowest level since January 2020. The current price ratio has been historically associated with ETH price bottoms, which have preceded altseasons. Still, the metric needs to rally above its 365-day moving average before ETH can record a new and sustainable leg against BTC.

To substantiate the possibility of a strong mean-reversion potential, CryptoQuant pointed out that ETH recently dipped into an extreme undervalued zone relative to BTC. This was evident in the ETH/BTC Market Value to Realized Value ratio, which plunged to its lowest level for the first time since 2019.

Similar cases of an MVRV ratio dip recorded in 2017, 2018, and 2019 were followed by periods where ETH outperformed BTC.

ETH Sees Bullish Signals

Recently, ether’s price has been on a positive trajectory, and this performance has coincided with higher spot trading volume relative to BTC. The ratio of ether’s spot trading volume relative to BTC rose last week to 0.89, a level not seen since August 2024. This signalled that market participants increased their exposure to ETH compared to Bitcoin.

CryptoQuant mentioned that traders’ increased exposure to ETH compared to BTC has also happened from 2019 to 2021, during which ETH outperformed BTC by 4x. Ether’s spot trading volume has also begun to grow faster than bitcoin’s, indicating higher demand for the second-largest crypto asset.

Furthermore, investors also favor ETH through their allocations to exchange-traded funds (ETFs). Higher ETH purchases have triggered a spike in the ETF holdings ratio since late April.

“The growing ETH allocation likely reflects expectations of relative outperformance, possibly driven by catalysts such as recent scaling upgrades or a more favorable macro environment,” CryptoQuant explained.

Additionally, ETH is seeing lower sell pressure relative to BTC, as seen in exchange inflow data. The exchange inflow ratio has fallen to its lowest level since 2020, indicating that ETH is facing significantly lower selling pressure than BTC. This has always been a bullish signal for ETH, supporting further gains for the cryptocurrency.