The ETH/BTC ratio has hit extremely low levels, signalling potential growth for ETH against BTC. However, institutional interest is declining, with fewer staked ETH and struggles in core Ethereum metrics. The market faces challenges despite the bullish ratio indicator, while Bitcoin’s value is rising amid a turbulent economic backdrop.
The ether (ETH) and bitcoin (BTC) markets are sending mixed signals according to a recent analysis by CryptoQuant. The ETH/BTC ratio has plummeted to levels deemed “extremely undervalued,” suggesting potential for ETH to outperform BTC in the long term. Historically, such low ratios have preceded significant ETH rallies, but experts advise caution due to several ongoing challenges in the market.
As of now, the ETH/BTC ratio stands at 0.019. This marks a staggering 75% drop from its peak above 0.08 back in late 2021. The market value to realized value (MVRV) ratio, which compares a token’s current market cap to its historical value, has also hit multi-year lows. MVRV reflects the average cost basis of all circulating coins, and right now, it paints a rather bleak picture.
However, not all signs point to a recovery. Ethereum’s network activity has stagnated, with active addresses and transaction counts showing little to no growth since 2021. This flat trajectory raises concerns about the overall health of the Ethereum ecosystem. Furthermore, the recent Dencun upgrade is linked to falling transaction fees, which, according to CryptoQuant, has sharply reduced fee-burning activity.
It’s not just on-chain activity that’s a cause for concern; institutional interest in staking ETH is waning. The total amount of ETH staked has dipped to around 34.4 million from an all-time high of 35.02 million ETH in November 2024. This decline signals reduced confidence among both crypto-native and traditional investors, which could put further downward pressure on the asset.
The situation is compounded by investment products, where ETH balances have tumbled by about 400,000 since early February. These falling numbers highlight a broad decline in institutional demand, making it clear that many investors are exploring other options or seeking more liquid positions amidst a challenging market.
Interestingly, while Ethereum struggles, Bitcoin is witnessing a surge. The cryptocurrency touched nearly $100,000 earlier this week, as it’s increasingly positioned as a refuge for risk-averse investors amid uncertain macroeconomic conditions. This divergence between the two largest cryptocurrencies continues to raise eyebrows.
In conclusion, while the ETH-BTC ratio hints that ETH might be in a good spot for a comeback, the absence of growth in network usage, coupled with declining institutional interest, means that crypto traders should perhaps hold off on bullish bets for the near future. There’s a lot to keep an eye on, and a hopeful outlook for ETH may yet become clouded by these ongoing headwinds.
