In the frenzy of BTC breaking 97,000, one cryptocurrency's performance has been overlooked by many - ETH surged nearly 8% in a single day, skyrocketing from $3,324 to $3,589, directly outperforming BTC! However, in my view, this is just the beginning of ETH's explosion. As a seasoned crypto analyst, I have found through in-depth research that ETH is currently in a state of severe undervaluation, with the ETH/BTC ratio having dropped to a multi-year low, hiding the most worthwhile investment opportunity for next year. Today, let's break down these three core logics to help you see the true value of ETH.
Some friends may wonder: As 'digital gold', BTC has always been the leader of the crypto market, why do you think ETH can surpass it? The answer is quite simple: BTC's core value is value storage, while ETH's core value is ecological innovation. In the current stage where the crypto market is transitioning from 'speculation' to 'application landing', ETH's ecological advantages will continue to be amplified. Let's look at a set of key data: As of December 4th, the ETH network added 190,000 wallets in a single day, the transaction volume of the second-layer network reached a historical high, while the average fees remained at a cyclically low level. Behind this set of data is the continuous prosperity of the ETH ecosystem.
The first core logic: The scalability breakthrough brought by the EIP-4844 upgrade. Many retail investors may not be sensitive to technical upgrades, but I want to tell you that this is the most crucial technological change for ETH this year. The 'Blob fee' mechanism introduced by EIP-4844 significantly reduces data storage costs, especially for Layer 2 network aggregation, where the efficiency improvement is particularly remarkable. Currently, RISE Chain's 'Layer2+ Parallel EVM' architecture has received investment from Vitalik, and Taiko's ZK-Rollup technology is also continuously optimizing privacy efficiency. In my view, the direct impact of these technological upgrades is that the application landing threshold of the ETH ecosystem has been significantly lowered, and applications such as DeFi, NFT, and AI agents will usher in explosive growth. For example, the tokenized AI agent launched by Virtuals Protocol on Ethereum L2 Base has realized a new model of 'user creation - agent interaction - profit sharing', and the current locked amount of this protocol has exceeded $1 billion, which is the ecological dividend brought by technological upgrades.
The second core logic: The valuation of ETH is severely undervalued compared to BTC. From the ETH/BTC ratio, this ratio has now fallen to a low point not seen in many years, indicating that ETH is severely undervalued compared to BTC. Although BTC has performed strongly after interest rate cuts, and its market dominance has increased (dominance index rising to 58.72%), this valuation misalignment will inevitably be corrected in the long term. According to historical data, every time the ETH/BTC ratio falls to a low point, ETH will experience a wave of rebound within 3-6 months, with an average increase of over 20% compared to BTC. More importantly, the ratio of ETH's network value to transaction volume (NVT) is 1041, which seems overvalued, but considering the explosive growth of its Layer 2 networks, the actual valuation is within a reasonable range. In comparison to the eve of the 2021 ETH bull market, when the NVT ratio was as high as 1500, it still welcomed a 3-fold increase later, so the current valuation of ETH actually has a strong safety margin.
The third core logic: Institutional funds are accelerating their layout in the ETH ecosystem. Many people think that institutions only focus on BTC, but in fact, more and more institutions are starting to lay out the ETH ecosystem. According to a report released by the Gate Research Institute on December 8, JPMorgan has deployed the Onyx project for on-chain corporate settlement, Swiss banks are participating in the issuance of on-chain bonds for the ETH ecosystem, and Citibank has launched a tokenized deposit experimental platform based on ETH. The entrance of these institutions not only brings in a large amount of capital but also promotes the integration of the ETH ecosystem with traditional finance. More critically, the cryptocurrency working group established by the Trump administration has clearly stated that it will support the compliant development of the ETH ecosystem, and the improvement of regulatory clarity will further attract institutional capital to enter. In my view, the layout of institutions in the ETH ecosystem is the core driving force for ETH's long-term rise.
Based on the above analysis, here are 3 operational suggestions for ETH: First, for short-term investors, focus on the $3600 resistance level. If it can successfully break through, it is expected to challenge the $3800-$4000 range; if it fails to break through, consider reducing some positions at a high point and wait for a pullback to around $3400 to re-enter. Second, for medium to long-term investors, hold firmly while paying attention to high-quality projects in the ETH Layer 2 network, such as Base, Mantle, etc. These projects are expected to enjoy the dividends of ecological explosion. Third, for investors with a higher risk appetite, consider allocating tokens from DeFi protocols in the ETH ecosystem, such as Uniswap v4, Aave V3, etc. These protocols have significant advantages in areas like RWA integration and cross-chain liquidity optimization.
Finally, I remind everyone: Although ETH currently has strong investment value, market volatility risks must still be heeded. Although the fear and greed index has rebounded recently, it remains at a relatively low level, indicating that market sentiment has not yet reached extreme euphoria, which is actually a good thing, meaning that the trend still has continuity. If you want to get real-time tracking of high-quality projects in the ETH ecosystem or need personalized position allocation advice, follow me @链上标哥 so you won't get lost!
