Ivan Larsen 
The crypto ecosystem hasn’t been faring as well as expected over the last few months, as stagnation became the rule for most coins. Even popular, well-known trading pairs such as ETH/BTC have been dealing with this situation, and although most traders remain optimistic, there are also many who are concerned about the future and unsure of the next steps they should take when crafting their strategies. However, recent data appears to indicate that things aren’t what they seem in the crypto market at the moment, with Ethereum being the most obvious example.
Analysts believe that several metrics and on-chain data show that ETH is currently undervalued. But what exactly does that mean, and what does it say about the coin’s prospects for the short and long term?
The Overview
Fresh data coming straight from the crypto marketplace shows that Ethereum is trading at a discount, while the BTC/ETH market capitalization ratio is at levels recorded during the middle of 2020. Layer-2 active addresses have reached new highs, surpassing the 13.6 million milestone. Ethereum hasn’t been doing great in 2025 so far, as it recorded losses of nearly 50% during the year’s first quarter, negating the peak and gains accumulated following the results of the US presidential elections in January. A death cross appeared in March, while the 50-day simple moving average went 21% below the 200-day SMA.
All these movements show that the current momentum is overwhelmingly bearish, but there are also some researchers who believe that the price will ultimately swing in Ethereum’s favor. The MVRV score, which is used to compare realized value with market value, went to -0.18, entering an undervalued phase. In the past, those levels indicated that the market has reached a bottom, and this time, it is no exception. On top of that, it also shows that Ethereum is trading for much cheaper than its actual value right now.
The current market trend remains overwhelmingly bearish, and while long-term investors are holding on to their positions, most likely as a means of stabilizing the base price, short-term holders have already started selling off some of their assets.
Some investors have also pointed out the similarities to 2022, when Ethereum’s price dipped below the realized price, with the decline continuing until an inevitable recovery took place.
The Ecosystem
Additional metrics showed that the number of unique addresses interacting with both 1—and 2-layer networks has reached a new all-time high. The rate of active addresses was up almost 80% during the last week of May, which clearly shows that the network’s scalability protocols are working as intended and that adoption continues to remain popular. A new layer-2 protocol known as Unichain has led the charge with almost 6 million weekly active addresses.
Some traders have already started discussing the fact that ETH has officially reclaimed a position above the 12-hour Ichimoku cloud indicator that hasn’t been recorded since December 2024. The Ichimoku Cloud is a figure and technical indicator that is represented as a cloud on the price chart and can offer a comprehensive snapshot of the overall market trends. When the price is above the cloud, and the cloud itself becomes green, investors can be sure that the marketplace is turning and that the bullish sentiment will become predominant instead.
The Supply Rate
Ethereum’s supply growth rate has remained fairly low since the beginning of the year, something that traders have taken to show that the disinflationary effect of the Merge has stalled despite its initial efficiency. The supply rate has been in the negative for about a year now. The deflationary mechanism relies quite heavily on EIP-1559, which works by burning portions of transaction fees. But as on-chain activity levels continue to decrease and fees drop as well, the number of coins being burned is minimized.
The long-term holders have somewhat reduced their exposure since the days of the Merge as well, with wallets holding at least 100K tokens, reducing the numbers of their tokens. Some have actually stopped accumulating since September 2022, leading experts to conclude that there has been a fundamental shift in the ways in which investors approach Ethereum.
The change in sentiment can be attributed to the fact that many apparently don’t really trust ETH all that much anymore. Others have pointed out that, during the same timeframe, the number of BTC wallets holding between 100,000 and 1 million coins has increased considerably.
ETH/BTC
So, can this popular trading pair recover, and if so, when is it most likely to happen? Charts show that oversold conditions remain predominant, but it is also very likely that historical support areas may lend a helping hand and propel prices forward. These indicators have resulted in price appreciation in the past, so many hope that the same scenario will repeat itself this year. Yet, the fact that Ethereum remains overwhelmingly bearish could also lead to further declines down the road.
Since both situations are likely, it is essential to be attentive and mindful of the market changes. Remember what your financial goals are and determine which game plan is most likely to help you achieve them. Not all moves are a good idea for everyone, and you must decide on the best way to proceed, depending on your expectations. If you don’t feel comfortable dealing with a lot of risk, remember that you can just stick to what you know. There’s nothing wrong with taking time to decide what you should do next. In fact, it can help you make better choices.
The Bottom Line
If you’re an investor, it is essential to remember that the crypto environment remains as volatile and changeable as ever. In order to make the most of it, you will have to make sure that you’re never investing more than you can afford to lose. Doing so means that you’ll never encounter financial troubles as a result of your trading. Quite the contrary, it might be the best way to ensure growth and continuous profitability throughout your trading career.
