Statistically speaking, Is Ethereum undervalued? Probably

[Analyst101]

*I posted this on my blog, but wanted to share this.

There are several ways to examine whether Ethereum is undervalued. I examined a relationship between ETH transaction and ETH price, and conclude that ETH transaction is a good indicator to see the overall trend (rather than daily prediction) of ETH price. The research suggests that ETH is undervalued.


There was a statistically significant (P>|t| = 0.000) positive strong correlation (R2=0.93) between ETH transaction and ETH price. Each increase in ETH transaction is associated with 0.0009406 increase in ETH price.


However, the research was unable to find a statistically significant (P>|t| =0.216) nor strong correlation (R2=0.0016) between change in ETH transaction and change in ETH price.





Thus, while daily change in ETH transaction is potentially a poor indicator of daily change in ETH price, ETH transaction is potentially a good indicator of the overall trend regarding ETH price. However, the recent relationship between ETH transactions and ETH price shows that there is a large divergence. Now will it become tighter? Possibly. In that case, we can expect the right value of ETH to be around $600-700 per ETH assuming transactions remain steady.

It's interesting to note that ETH transactions seem to be highly correlated with Google searches for the word Ethereum. So part of the reason why ETH transactions and ETH price fell is because the public is losing interest in the project and in the cryptomarket as a whole.

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[bitmover]

Your work is nice, and there are out there many similar works, using transaction data and google searches.

It's a nice analysis but it cannot conclude anything for sure. No one knows what is going to happen.

Ethereum was 10 USD 1 year ago. it was 1500 USD 2 months ago. now it´s 400.

The whole cryptomarket is totally unpredictable. Invest what you can afford to lose.