ETH Drops into Undervaluation Range: Is Altseason Near?

Indicators related to Ethereum’s pricing are suggesting that an anticipated altcoin season might be imminent.

A recent analysis from a market analytics platform indicates that the ratio of ether (ETH) to bitcoin (BTC) may have reached its low point for this cycle. Historically, similar low points have often led to times when ETH significantly outperformed BTC, igniting a wider altcoin movement.

ETH Bounces Back from Low Valuation

In the past week, the ETH/BTC ratio has increased by 38% from its lowest point since January 2020. This current ratio is often linked with price bottoms for ETH, which typically precede altcoin seasons. However, for ETH to establish a new upward trend against BTC, it needs to surpass its 365-day moving average.

The potential for a strong rebound is reinforced by the observation that ETH recently fell into a significantly undervalued territory in comparison to BTC. This was highlighted by the ETH/BTC Market Value to Realized Value ratio, which hit its lowest point since 2019.

Previous instances of a decline in the MVRV ratio in 2017, 2018, and 2019 also led to periods where ETH outperformed BTC.

Positive Signs for ETH

Ether’s price has recently been rising, coinciding with an increase in spot trading volume compared to BTC. Last week, the ratio of ether’s spot trading volume to that of BTC climbed to 0.89, the highest level since August 2024. This indicates that traders are increasing their exposure to ETH relative to Bitcoin.

Previous trends from 2019 to 2021 showed that when traders favored ETH over BTC, the former outperformed the latter by fourfold. Additionally, ether’s spot trading volume is beginning to accelerate more quickly than bitcoin’s, signaling a growing demand for this second-largest cryptocurrency.

Moreover, investors are showing a preference for ETH through their investments in exchange-traded funds (ETFs). The rise in ETH purchases has led to an increase in the ETF holdings ratio since late April.

“The rising allocation towards ETH likely signifies expectations of superior performance, which may be influenced by recent scaling advancements or an improved macroeconomic environment,” noted the analytics platform.

Furthermore, ETH is experiencing reduced selling pressure compared to BTC, as indicated by the exchange inflow statistics. The exchange inflow ratio has dropped to its lowest level since 2020, suggesting that ETH is facing considerably less selling pressure than BTC. This has historically been a positive indicator for ETH, supporting the potential for further appreciation.