Analysts at CryptoQuant have reported the highest undervaluation of Ethereum compared to Bitcoin since 2019. They emphasized that historically, similar periods have typically preceded phases when Ethereum began to show significant price growth.
This is reported by Business • Media
Factors Affecting Ethereum’s Recovery
According to experts, factors such as high supply pressure, weakened demand, and stable network activity may hinder a rapid recovery for Ethereum. Their data indicates that the total supply of Ethereum has started to rise again, recently reaching a record of over 120.7 million ETH. This suggests a departure from the deflationary narrative following The Merge update and a return to inflationary issuance.
“The Dencun update has significantly reduced transaction fees, leading to a drop in Ethereum’s burn rate to nearly zero and restarting the growth of supply. Since the burn mechanism in EIP-1559 depends on the size of fees, the decrease in transaction costs has weakened Ethereum’s monetary policy. This is a structural change, so a return to deflationary dynamics in the short term is unlikely,” the experts explained.
Trends in Ethereum Network Activity
Experts also noted that activity on the Ethereum network has remained stable since 2021. According to their data, metrics such as the number of transactions and active addresses do not show significant growth. Analysts highlighted that investor interest in Ethereum is declining, as there is a decrease in the volume of assets in staking and a reduction in their number in funds. They believe this indicates a decrease in trust from both the crypto community and traditional investors.
According to the latest data, the volume of spot trading for Ethereum is decreasing, which could be a positive sign for the market.
“As Ethereum has recently been in a correction phase, the decline in volumes amid this situation may help reduce volatility. As a result, this could also partially alleviate the selling pressure that negatively impacts the market. This does not mean that the price has already reached the bottom, so caution is advised,” analysts explained.
At the time of writing, the asset is trading near the $1950 mark.