The etheric Bitcoin (ETH/BTC) ratio has historically reached a “very underrated” zone with a move that flashes bullish signals, but traders betting on sharp ether (ETH) recovery may want to pause.
Data from on-chain data company Cryptoquant shows that the Realized Value to ETH/BTC Market Value (MVRV) ratio has dropped to a multi-year low, reaching the level where the period of ETH outperformance against BTC was previously marked.
The exchange rate for two tokens, traditionally known as ratios, peaked above 0.08 in the second half of 2021. The ETH/BTC ratio was 0.019 for reporters, exceeding 75% from a record high.
MVRV is a metric that compares the value of each coin based on the capitalization that realizes the current market capitalization of a token, or the price it last moved on the blockchain. This effectively reflects the average cost base of all coins in circulation.
However, this time setting up may not be that easy. Network activity remains flat, with core usage metrics like transaction counts and active addresses having little momentum since the last Bull run, Cryptoquant said.
As shown in the chart above, an increase in the total supply of ether is directly linked to a sudden decrease in burned fees, indicating that burn activity is near zero. The reason behind this shift is the Dencun upgrade implemented in March 2024, which will significantly reduce transaction fees across the network, the company said.
Ethereum's network activity has remained almost flat since 2021, with no sustained growth in use over the past three years. This stagnation is reflected in key metrics such as transaction volumes and active addresses, indicating that the Ethereum base layer is not experiencing any meaningful expansion in activity on the chain.
Meanwhile, the growth of layer 2 solutions such as Arbitrum and base came at the expense of mainnet activity. This cannibalism dynamically reduces the fees in the base layer and weakens the story of the value of ETH.
Institutional demand is also being cooled. “Investor demand for ETFS and ETH as an institutional asset is undermined, as evidenced by the low balance between the ridiculous ETH held by ETFS and other investment vehicles,” writes Cryptoquant.
“The total pile has fallen from an all-time high, but the fund holdings continue to go downwards, indicating a decline in reliability from participants from crypto and traditional investors,” he added.
The amount of piles in ETH has fallen to around 34.4 million ETH, particularly from an all-time high of 3502 million ETH in November 2024, suggesting that investors may be relocating capital or seeking more liquidity position amid declining market conditions.
Furthermore, the ETH balance for investment products has been declining by around 400,000 ETH since early February, highlighting a broader decline in institutional demand.
Meanwhile, Bitcoin continues to rise despite the macroeconomic environment, touching on nearly $100,000 on Thursday as its attractiveness as a safe asset increases among investors.
