Ethereum: Bitwise Sees Severe Undervalue Amidst AI Boom

Ethereum, the second-largest cryptocurrency by market capitalization, has been identified as significantly undervalued by Bitwise, a leading cryptocurrency asset management company. In a recent report, Bitwise analysts stated that Ethereum is currently in "one of the most severe undervalued ranges in years."

The report, published on February 12th, highlighted that the ETH/BTC exchange rate has dropped by 47% over the past 12 months, according to data from CoinGecko. However, Bitwise Europe's Research Director, Andre Dragosch, believes that Ethereum's pricing is "fundamentally wrong" when compared to on-chain activity and adoption metrics. Dragosch attributed Ethereum's underperformance to the increasing interest in artificial intelligence, meme coins, and RWA tokenization, which benefit from lower transaction costs, while Ethereum's often congested and expensive network is at a disadvantage.

Furthermore, the report noted that the rise of L2 scaling solutions has dispersed activity across multiple ecosystems, limiting the value directly captured by the Ethereum base layer. Additionally, Ethereum's widespread use as a trading pair throughout the crypto ecosystem makes it prone to continued downward pressure when prices rise. However, Bitwise pointed out that historical data suggests Ethereum may see a rebound in February, as in the past eight years, Ethereum has had positive returns relative to Bitcoin in seven years.