Ethereum: a successful crypto, but the reality is quite different

For a few weeks now, the case of Ethereum has raised questions within the crypto community. How come a booming blockchain can be undervalued? What are the key elements shaping the future of this cryptocurrency?

Ethereum (ETH) crypto trades at a 27% discount to fair value

Ethereum: an undervalued crypto

The rapid growth and rise in popularity of the Ethereum crypto in 2023 has surprised many. Unfortunately, this is not necessarily reflected in its value compared to Bitcoin (BTC).

Recent analysis reveals that Ethereum’s native cryptocurrency Ether (ETH/USD) is currently valued at 27% below its fair value. At the time of writing, the crypto price stands at $1,882.

This observation reveals how blockchain has developed over time. It also shows how Ethereum has gone beyond its beginnings to become a multi-faceted crypto platform.

More explicitly, the report highlights the use of Metcalfe’s law to evaluate the Ethereum crypto network. According to this law, the value of a network grows with the square of its active users. Certainly, Ethereum has followed this rule before. But since March 2021, the crypto has been trading at a premium due to the upgrades.

Why this undervaluation?

THE various use cases of Ethereum applications have resulted in higher on-chain activity compared to less versatile crypto networks like Bitcoin. This versatility has allowed the blockchain to surpass Bitcoin in terms of active users in 2023. Since the launch of the crypto platform, the rate of active users on Ethereum has constantly surpassed that of Bitcoin.

Important clarification: Macroeconomic factors play a crucial role in user participation in networks. Often, periods of liquidity expansion coincide with the outperformance of networks that meet a wide range of user needs.

Despite the growing adoption of the Ethereum network, the crypto market has not yet reflected the rise in value of ETH compared to Bitcoin. This difference highlights the untapped potential of Ethereum as well as the need to closely monitor its evolution.

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