Odaily News Analysts at crypto asset management firm Bitwise said in a report that Ethereum has reached "one of its most undervalued areas in years."
At press time, the ETH/BTC exchange rate is down 47% over the past 12 months, according to data from Coingecko. But Andre Dragosch, head of research at Bitwise Europe, believes that Ethereum is “fundamentally mispriced relative to on-chain activity and adoption metrics.”
Growing interest in artificial intelligence, meme coins, and RWA tokenization was cited as contributing to ETH’s underperformance. “These sectors benefit from lower transaction costs, while Ethereum’s often congested and expensive network is at a disadvantage,” the report said.
Dragosch added that the rise of L2 scaling solutions “fragmented activity across multiple ecosystems, limiting the value captured directly by Ethereum’s base layer.” Worse, ETH is “widely used as a trading pair across the crypto ecosystem, making it vulnerable to sustained downward pressure from arbitrage as prices rise.”
Additionally, Bitwise noted that historical data suggests that ETH could “bounce in February,” as ETH has had positive returns relative to BTC in seven of the past eight years. (Decrypt)