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Ethereum price consolidated near $3,000 during the last week of November. It is up 15% from the recent low of $2.6K, but remains 40% below its record high of $4.9K reached in August.
For Ki Young Ju, CEO of CryptoQuant, however, the altcoin was significantly undervalued in most metrics and models. He joked,
“10 out of 12 Ethereum valuation models indicate that ETH is undervalued.”
At press time, the median, or composite fair value based on the 12 models, had an average price target of $4.8k. This suggests that ETH was undervalued by 59% from its current level, which was near $3,000.
Source: ETHVal
However, two other metrics, P/S ratio multiple and earnings yield, suggest that ETH was overvalued and expected to trade at $820 and $1,200, respectively.
ETH Recovery Path Assessment
Another data set that matched the Fair Value Composite’s “undervalued” rating was the realized price or cost basis of most addresses accrued.
Since 2019, ETH has rebounded from the realized price and recently reached this level. Therefore, if history repeats itself, the “local bottom” could be reached and a prolonged recovery could be likely, according to CryptoQuant.
Source: CryptoQuant
Impact of ETF Flows on ETH
After seeing strong ETF inflows of around $12 billion between April and October, the price of ETH tripled to nearly $5,000.
However, flows subsequently declined and $3 billion was withdrawn from the products, dragging the price below $3,000 over the past two months.
Source: Hidden Face
At press time, institutional inflows showed a slight recovery, which could help drive ETH’s rebound if the trend continues in December.
Is Fusaka the next catalyst?
Another potential bullish catalyst, analysts say, is the Fusaka upgrade, which is scheduled to activate on December 3.
Fusaka will increase gas limits, allowing more transactions to be processed per block. This will in turn result in more ETH being burned.
Ultimately, this will make ETH deflationary and improve value accumulation, noted analyst Joseph Young.
That being said, one ICO era whale banked $120 million in ETH. If profit booking continues, this could limit the recovery if more original players continue to post profits.
Final Thoughts
- ETH was undervalued by 59% according to key models, and historical price action close to the realized price suggests the bottom may be reached.
- But there was still selling pressure from ICO-era players that could derail the recovery.
