If the thesis is correct, ETH would be at a good purchase point, before a future revaluation.
“It is difficult for Ethereum to challenge Bitcoin’s dominance in the short term,” admits Ecoinometrics.
The cryptocurrency ether (ETH) is currently about 42% below its implied value compared to the price of bitcoin (BTC), according to an analysis by the firm Ecoinometrics.
This marked relative undervaluation underscores a broader market reality: ETH’s difficulty in challenging BTC’s dominance in the short term.
In the chart below, the pink line represents the actual price of ETH, while the blue line shows the theoretical price or “model” derived from the behavior of bitcoin.
What is stated by Ecoinometrics is based on a regression log-log of historical prices – a statistical model that estimates the long-term relationship between variables – shows that ether is significantly lagging behind the theoretical price derived from the behavior of bitcoin.
Beyond this angle of quantitative valuation, Ecoinometrics points out that “it is difficult to see Ethereum challenging Bitcoin’s dominance anytime soon,” as it lacks powerful narratives that can compete with bitcoin’s structural strength.
During the 2020-2021 cycle, the rise of non-fungible tokens (NFTs) and the explosive growth of Web3 games served as powerful catalysts to inject capital into the Ethereum ecosystemboosting the price of its native cryptocurrency. However, these trends have its traction has decreased, as reported by CriptoNoticias.
Although real-world asset (RWA) tokenization is seen as the next big story in the decentralized finance (DeFi) space, this sector still requires significant momentum and greater institutional adoption to generate an impact comparable to what bitcoin-focused institutional capital has had.
In this context, the 42% gap shows that, while bitcoin continues to attract constant flows, especially through new investment vehicles, liquidity in ether still largely depends on the development of new and robust use cases in its ecosystem.
The persistent undervaluation of ether and the absence of a sufficiently strong alternative cryptocurrency market narrative reinforce bitcoin’s position as the dominant digital asset. Asset tokenization may be the key to a future rally in the Ethereum ecosystem, but for now, industry leadership remains firmly planted in bitcoin.
It is important to note that this conclusion is attributed to Ecoinometrics, as there is no universally accepted intrinsic or “fair” value for ether. The analysis offers a quantitative perspective to identify possible price misalignments between the two main digital assets in the market. But, each investor should do their own research before making decisions about their capital.