Ethereum Hits Undervalued Zone, But Bottom Not Yet Confirmed

Ethereum has dropped to an undervalued zone, trading around 17% below its average on-chain cost basis of approximately $2,304. According to CryptoQuant's analysis, this level of undervaluation is historically associated with reduced selling pressure and narrower drawdowns during bear phases.

However, only two out of the firm's five bottoming indicators have reached levels that marked prior cycle lows. The ETH/BTC MVRV ratio has dropped sharply from its 2025 peak, indicating Ethereum has become significantly cheaper relative to Bitcoin. Spot trading volumes have also collapsed, suggesting speculative interest in Ether has been 'fully washed out.'

Despite these signals, three of CryptoQuant's five indicators remain neutral rather than bullish. The relative valuation against Bitcoin and exchange flows tell a similar story, Ethereum was extremely overvalued during its rally through August 2025, but the premium has evaporated, and the ratio has not yet reached the deeply undervalued extremes that preceded previous stretches of sustained outperformance.

CryptoQuant's head of research, Julio Moreno, described Ether as 'cheaper, not capitulated,' warning that the bottoming process could take several more months. He noted that when Ethereum goes lower and nears the lower band, the risk-reward ratio is greater, but they haven't quite gotten there yet.