Ethereum (ETH) is emerging as a focal point for investors and institutions alike, with growing signs pointing to a potential breakout. According to a recent report by CryptoQuant, ETH has entered historically undervalued territory when compared to Bitcoin (BTC), sparking renewed interest from both retail and institutional players. As the cryptocurrency market shows signs of recovery, Ethereum’s relative strength and upcoming catalysts are fueling expectations of a broader "alt season" — a period where alternative cryptocurrencies outperform Bitcoin.
This shift in market sentiment isn't just speculative; it's backed by on-chain data and investor behavior that suggest a structural repositioning is underway.
Ethereum’s ETH/BTC MVRV Ratio Signals Deep Value
One of the most compelling indicators comes from Ethereum’s ETH/BTC Market Value to Realized Value (MVRV) ratio — a metric that measures the relationship between market capitalization and the realized value of all coins in circulation. When this ratio dips into historically low territory, it often signals that ETH is undervalued relative to BTC.
The latest CryptoQuant analysis reveals that this ratio has reached levels not seen since 2019. Historically, such lows have preceded significant rallies, with ETH outperforming BTC by wide margins in the months that followed.
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This deep value signal is now attracting attention from ETF buyers. Data shows that the ETH/BTC ETF holdings ratio has risen sharply since late April, indicating that institutional investors are reallocating capital toward Ethereum. This strategic shift suggests confidence in ETH’s ability to deliver superior returns in the near term.
Institutional Demand Rises Amid Pectra Upgrade Optimism
Several catalysts may be driving this renewed optimism. Among them is the Pectra upgrade, which went live in May 2025 and introduced key improvements to Ethereum’s scalability, security, and staking infrastructure. By enhancing network efficiency and reducing transaction costs, the upgrade has helped restore confidence among developers and investors.
Additionally, macroeconomic conditions appear more favorable. With inflation pressures easing and central banks signaling potential rate cuts in 2025, risk assets like cryptocurrencies are regaining appeal. Ethereum, as the backbone of decentralized finance (DeFi), non-fungible tokens (NFTs), and smart contract platforms, stands to benefit disproportionately from increased capital inflows.
The ETH/BTC price ratio has already rebounded 38% from its January 2020 low — a strong early signal that the market believes the bottom is in. A sustained move above key technical levels could trigger further buying momentum.
On-Chain Metrics Confirm Growing Investor Appetite
Beyond ETF flows and technical indicators, on-chain activity paints a bullish picture:
- Spot trading volume of ETH relative to BTC surged to 0.89 last week — the highest level since August 2024 — reflecting renewed investor interest.
- Exchange deposits of ETH have declined to their lowest levels since 2020. Since moving coins off exchanges often indicates long-term holding intentions, this drop suggests investors expect higher prices ahead and are less inclined to sell.
- The number of active addresses and daily transactions on the Ethereum network has stabilized after a period of decline, hinting at foundational strength despite slower growth in application usage.
These trends mirror patterns observed between 2019 and 2021, when Ethereum eventually outperformed Bitcoin by fourfold during the DeFi summer and NFT boom.
Challenges Remain: Network Usage Lags Behind Price Momentum
Despite these positive signals, CryptoQuant warns that Ethereum still lags in actual network activity. While price and investor sentiment are improving, on-chain usage — such as decentralized exchange (DEX) volume, new wallet creations, and dApp engagement — has not yet seen a corresponding surge.
This disconnect poses a risk: without broader adoption and real-world utility driving demand, sustained price appreciation may be difficult to maintain. After all, Ethereum’s long-term value proposition hinges on its role as a global settlement layer for decentralized applications.
For now, confirmation of a true bull run will depend on ETH decisively breaking above its 365-day moving average against BTC. Such a breakout would validate the current accumulation phase and potentially unlock the next leg of gains.
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Core Keywords Driving Market Sentiment
The current narrative around Ethereum revolves around several key themes:
- Undervalued Ethereum
- ETH/BTC ratio
- Ethereum ETF demand
- Alt season prediction
- On-chain analysis
- Pectra upgrade
- Institutional crypto adoption
- Market cycle indicators
These keywords reflect both technical and fundamental drivers shaping investor decisions. When naturally integrated into market discussions, they enhance discoverability while providing genuine insights.
Frequently Asked Questions (FAQ)
Q: Why is the ETH/BTC ratio important?
A: The ETH/BTC ratio measures Ethereum’s strength relative to Bitcoin. When this ratio rises, it indicates that ETH is outperforming BTC — often a precursor to an "alt season" where other cryptocurrencies also gain momentum.
Q: What does a low MVRV ratio mean for Ethereum?
A: A low Market Value to Realized Value (MVRV) ratio suggests that Ethereum is trading below its historical fair value. Such conditions have historically preceded strong price rallies.
Q: How do ETF holdings impact ETH price?
A: Rising ETH ETF holdings signal growing institutional demand. When large investors allocate capital through regulated products like ETFs, it increases buying pressure and market confidence.
Q: Is network usage affecting Ethereum’s price potential?
A: Yes. While investor sentiment is positive, sustained price growth requires real-world usage — such as DeFi transactions, NFT mints, and dApp interactions — to justify valuations.
Q: What is the significance of the Pectra upgrade?
A: The Pectra upgrade improved Ethereum’s scalability and staking mechanics, making the network more efficient and secure. It also laid groundwork for future enhancements like sharding and proto-danksharding.
Q: Can Ethereum outperform Bitcoin in 2025?
A: Current data suggests it’s possible. With ETH showing signs of being undervalued, rising institutional interest, and strong technical momentum, many analysts believe Ethereum is well-positioned for outperformance if macro conditions remain supportive.
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Final Outlook: A Building Foundation for Growth
While challenges remain — particularly around network utilization — the foundation for an Ethereum-led rally appears to be forming. With compelling valuation metrics, increasing institutional ETF demand, declining selling pressure, and a supportive upgrade cycle, ETH is quietly setting the stage for a major move.
If history repeats itself, the current accumulation phase could soon give way to explosive growth — not just for Ethereum, but for the broader altcoin ecosystem. For informed investors, now may be the time to assess positioning and prepare for what could be one of the most consequential market shifts of 2025.