Recent on-chain data suggests Ethereum (ETH) could be undervalued against Bitcoin (BTC), with the ETH/BTC ratio hitting a multi-year low. However, several factors are hindering a potential resurgence for ETH, including stagnant network activity and waning institutional interest. Despite positive valuation signals like this historically low ratio, key indicators show Ethereum’s momentum is slowing down. 2025 might not see such strong price rebound as the past, according to analysts.
The decline in Ethereum’s transaction volume, active addresses, and user base since 2021 suggests a shift towards cheaper Layer 2 networks like Arbitrum and Base.
This change has lowered burn rates on the Ethereum network, weakening its deflationary mechanism. Meanwhile, institutional demand for ETH is declining, with decreased staked ETH balances and falling ETF holdings. These factors suggest ETH’s popularity is waning as a yield-bearing asset in institutional portfolios.
Bitcoin continues to rally strongly while Ethereum struggles. This divergence highlights the shift in investor preference towards BTC amid macroeconomic uncertainty.
Analysts caution that Ethereum’s undervaluation may require stronger catalysts, such as increased DApp activity, higher Layer 1 fees, and renewed institutional engagement. Without such developments, ETH might face a longer road to recovery.