Why CryptoQuant’s CEO thinks Ethereum is currently undervalued

Ethereum price consolidated near $3000 throughout the last week of November. It was up 15% from the recent low of $2.6k but remained 40% below its record peak of $4.9k hit in August.

For CryptoQuant CEO Ki Young Ju, however, the altcoin was grossly undervalued across most metrics and models. He quipped,

“10 out of 12 Ethereum valuation models say ETH is undervalued.”

At press time, the median value, or Composite Fair Value based on the 12 models, had an average price target of $4.8k. It suggested that ETH was 59% undervalued from its current level, which was near $3k.

Source: ETHVal

However, two other metrics, the P/S ratio multiple and revenue yield, suggested that ETH was overvalued and should trade at $820 and $1,200, respectively.

Assessing ETH recovery path

Another data set that aligned with the Composite Fair Value’s ‘undervalued’ rating was the realized price or the cost basis of most accumulating addresses.

Since 2019, ETH has bounced off the realized price and recently touched this level. Therefore, if history repeats itself, the ‘local bottom’ could be in, and an extended recovery could be likely, per CryptoQuant.

Source: CryptoQuant

ETF flows impact on ETH

After recording strong ETF inflows of about $12 billion between April and October, the ETH price tripled to nearly $5k.

However, the flows tapered afterward, and $3B was pulled from the products, dragging the price below $3k in the past two months.

Source: Farside

At press time, institutional inflows showed a slight recovery, which could help boost the ETH rebound if the trend continues into December.

Is Fusaka the next catalyst?

Another potential bullish catalyst, according to analysts, is the Fusaka upgrade, scheduled for activation on the 3rd of December.

Fusaka will increase gas limits, allowing for the handling of more transactions per block. This will, in turn, lead to more ETH being burned.

Eventually, this will make ETH deflationary and improve value accrual, noted analyst Joseph Young.

That being said, an ICO-era whale cashed out $120 million in ETH. If profit booking continues, it could cap the recovery if more original players continue to book profits.

Final Thoughts

• ETH was undervalued by 59% according to key models, and historical price action near the realized price suggested the bottom may be in.
• But there was still selling pressure from ICO-era players that could derail the recovery.