Ethereum’s price action is fueling anticipation for a new “alt season,” as detailed in a recent CryptoQuant analysis.

According to the report, Ethereum’s ETH/BTC Market Value to Realized Value (MVRV) ratio—a key metric used to assess relative market valuation and investor sentiment—has dipped into historically rare lows unseen since 2019. This suggests ETH is deeply undervalued compared to Bitcoin, setting the stage for a potential upswing.

Past instances of similarly low MVRV ratios have often led to significant ETH rallies that outperform Bitcoin by large margins.

Investor behavior supports this outlook. Data shows that holdings of ETH ETFs relative to BTC ETFs have surged sharply since late April, indicating growing institutional confidence that Ethereum will outperform Bitcoin. This optimism may be driven by recent upgrades like Pectra or a more supportive macroeconomic environment.

Reflecting this shift, the ETH/BTC price ratio has climbed about 38% from its weakest point since early 2020, signaling that traders believe ETH has bottomed out and a wider altcoin rally could be imminent.

Market insiders reinforce this view. March Zheng, General Partner at Bizantine Capital, noted that ETH’s price movements often act as a bellwether for risk appetite in the altcoin market, with its gains frequently foreshadowing broader alt rallies.

On-chain data backs these sentiments, with ETH’s spot trading volume relative to BTC hitting its highest level since August 2024 at 0.89 last week, marking renewed investor interest similar to the 2019-2021 period when ETH notably outperformed BTC.

Moreover, ETH exchange deposits—often a sign of selling pressure—have fallen to their lowest levels relative to BTC since 2020, suggesting holders are reluctant to sell and expect higher prices ahead.

However, a clear confirmation of the bullish trend depends on ETH breaking above its key 365-day moving average relative to BTC.

Despite strong undervaluation and growing institutional demand, CryptoQuant cautions that Ethereum’s network activity remains a bottleneck. Without increased adoption and usage, sustaining a major price rally could prove difficult.

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