Ethereum price has moved sideways in the past few days as sentiment in the crypto industry waned. ETH has remained solidly above the key support level at $3,000 and formed a rare bullish chart pattern on the weekly chart. Also, there are signs that Ethereum has become a highly undervalued coin.
Fundamentals Support an Ethereum Price Rebound
Ethereum has some of the best fundamentals in the crypto industry, which explains why BitMine has continued to accumulate it in the past few months. It has bought over 4 million tokens and is on a path to owning 5% of the supply.
Data show that Ethereum has become highly undervalued compared to other networks. For example, data compiled by TokenTerminal shows that Ethereum has a fully diluted market capitalization of over $372 billion, while the application TVL stands at $335 billion.
As the chart below shows, the application TVL has provided a floor for ETH price for over five years. The main reason for this is that most applications on Ethereum require ETH as a core input to power their businesses. A good example of this is Aave, which has $20 billion of ETH in deposits. When used as collateral, the deposits let users take out loans, meaning that Aave creates new demand for ETH.
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Meanwhile, Ethereum has a market capitalization to DeFi TVL ratio of 2.56, much lower than other tokens. For example, Solana has 3.83, while Binance Coin has 13.24. Tron has a multiple of 6.16.
Ethereum will likely continue growing its market share to other networks as it becomes the most common chain for issuing assets now that its transaction cost has tumbled in the past few months.
Indeed, some analysts believe that there will be no need for layer-2 networks in the future as Ethereum will have both the speed and costs for running operations.
Ethereum has a market dominance of over 75% in decentralized finance (DeFi) and 60% in the real-world asset (RWA) tokenization industries. These numbers are impressive considering that more layer-1 and layer-2 chains have been launched in the past few years. Some of the most notable additions were Ink, Plasma, and Hyperliquid.
Ethereum Price Technical Analysis
The weekly timeframe chart shows that ETH price has remained slightly above the 100-week Exponential Moving Average (EMA), which is a highly bullish sign in technical analysis.
Ethereum price has also formed a large inverse head-and-shoulders pattern. In this case, the head is at $1,385, while the left shoulder is at $2,126, and the right one is at $2,627. This pattern often leads to a strong bullish reversal over time.
Therefore, the most likely scenario is where it rebounds, especially now that CZ has predicted a potential crypto super cycle. If this happens, there is a likelihood that the coin will move above the key resistance level at $4,000 soon. A move above that level will point to more gains, potentially to the next key level at $5,000.
However, for this to happen, ETH price will need to overcome the bearish flag pattern that has emerged on the weekly chart.
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