Ethereum Valuation Models Suggest Undervaluation Amid Market Volatility

The native token of the Ethereum network, Ether, or ETH, is currently undervalued according to nine out of twelve commonly used valuation models, as stated by Ki Young Ju, the CEO of the crypto market analysis platform CryptoQuant.

Ju's analysis reveals that a composite fair value for ETH, based on these models, is approximately $4,836, indicating a potential gain of over 58% from its trading price just above $3,000 at the time of the report.

Among the valuation models, eight received a reliability rating of at least two out of three, demonstrating a solid foundation of trust from experts in both academia and traditional finance. One notable model, the App Capital valuation model, which includes total on-chain assets such as stablecoins, ERC-20 tokens, non-fungible tokens, and real-world tokenized assets, estimates a fair value for ETH at $4,918.

Using Metcalfe's Law, which correlates the value of a network to the square of its active user base, suggests that ETH could be priced at $9,484, implying an undervaluation of over 211%. Another framework, the Layer-2 valuation model, which considers the total value locked in Ethereum's Layer-2 scaling ecosystem, sets ETH's fair price at $4,633, marking a 52% undervaluation.

Despite this generally favorable outlook, the Revenue Yield valuation model presents a contrasting view, arguing that ETH is overvalued by 57%, with a recommended price of around $1,296. This model is considered the most reliable according to ETHval's criteria and methodology, pointing to a decline in revenue generation as network fees hit record lows and competition from other blockchain networks grows.

The Ethereum community continues to engage in discussions about the most accurate methods for valuing this pioneering smart contract platform, with ongoing debates about the suitability of traditional models for determining the worth of emerging digital assets.

Analysts emphasize that the current analysis could significantly influence investor strategies as they navigate through the current volatile market environment.