The ether-bitcoin (ETH/BTC) ratio has reached a multi-year low, which CryptoQuant identifies as an 'extremely undervalued' level for ETH. Historically, such lows have indicated periods of ETH outperforming BTC. The ratio peaked at over 0.08 in late 2021 but has since dropped to around 0.019—a decline of more than 75% from the highs.
Despite this, on-chain data reveals Ethereum's core network activity remains largely stagnant. Metrics such as transaction counts, active addresses, and transaction volume have seen minimal momentum since the last bull run. The Dencun upgrade, implemented in March 2024, dramatically reduced mainnet transaction fees. While this benefits users, it has also led to near-zero ETH burn rates, increasing total ETH supply and weakening ETH's value accrual case.
The rise of Layer 2 solutions, especially Arbitrum and Base, diverts activity from Ethereum’s mainnet, further reducing base layer fees. Institutional interest is also waning, with staked ETH falling from 35.02 million in November 2024 to 34.4 million, and investment product holdings dropping by 400,000 ETH since February. This signals flagging confidence across both crypto-native and traditional institutional investors. Meanwhile, bitcoin has continued to rally, nearing $100,000 as investors increasingly view it as a safe-haven asset.