Ethereum (ETH), the largest altcoin, generated excitement in the market last August by reaching a new all-time high. While this rise was expected to continue, Ethereum experienced unexpected drops, falling as low as $2,600.
With ETH holding above $3,000 in recent weeks, bullish expectations continue, and analysis firm Alphractal has examined Ethereum’s on-chain data.
Alphractal's Assessment of Ethereum's Valuation
Cryptocurrency analytics company Alphractal stated in its latest assessment that the Ethereum price is volatile and that fundamental indicators point to ETH being undervalued.
According to the company’s latest analysis, the Metcalfe Ratio is trending downwards, and the Adoption Score is at level 1 (the lowest). Historically, this has meant that Ethereum is undervalued relative to on-chain activity.
According to the company, the drop in the Ethereum Metcalfe ratio indicates that Ethereum’s valuation is not keeping pace with the actual network adoption rate. This suggests that the ETH price is trading below its intrinsic value.
Understanding the Adoption Score
The Adoption Score also indicates a stagnant market for Ethereum. The Adoption Score is currently at level 1, which is its lowest level in its historical range.
According to the analysis firm, this reflects a stagnant market in terms of valuation compared to in-chain activities.
Historically, this level tends to appear during periods of indecision or bear markets, rather than at the peaks of regional cycles.