On-Chain Data Says ETH Is ‘Undervalued’
Let’s take a closer look at on-chain data to see where various metrics were back when ETH hit the $4,000 mark those last three times. For the purpose of this analysis, we will ignore the November 2021 all-time high as conditions were entirely different back then.
Let’s focus on the March 2024, May 2024, and December 2024 retests as conditions were similar.
The first thing we can see is that stablecoin reserves have exploded in just a few months meaning that a lot of money has been moved into the Ethereum ecosystem, even as the price was collapsing.
Stablecoin reserves mean that additional funds are being deposited into decentralized finance (DeFi) applications. This should result in higher network activity and signals increased adoption rates.
Pectra May Have Solved Ethereum’s Main Roadblock
The world has been progressively embracing Ethereum but the market’s response to that has been somewhat slower than expected.
There were, however, clear reasons why the price of ETH dropped so sharply and, at some point, underperformed most of its peers. Scalability.
The Ethereum Virtual Machine (EVM) struggled to keep up with the rise of faster blockchains like Solana and Sui. However, none of these compares to the former in terms of decentralization.