Statistically speaking, Is Ethereum undervalued? Probably

[Analyst101]

*I posted this on my blog and on serious discussion, but I 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.

[1714605209]

1714605209

[1714605209]

1714605209

[1714605209]

1714605209

[1714605209]

1714605209

[Tipstar]

And the number of ethereum transaction is increasing rapidly with every new tokens added to it's platform and the overall adoption of Ethereum and based tokens. The only thing holding it's price is the scalability issue. If ethereum overcame this, they'll soon be the number one currency for marketcap and use.

[leonair]

More network transaction doesn't mean of a big price value of a coin though because at the end of the day the the law of supply and demand will be the main thing, maybe the reason for its price decreasing is more people are selling it in a lower price instead of buying it at a much higher price.

Most of the coins right now are undervalued if you will compare it at their respective all time highs so Ethereum is not the only coin that's experiencing this kind of situation. You got a nice graph though but it's much better to make a comparison to different kinds of Cryptocurrency coins, just my thought.

[smyslov]

The bear trend is what caused Ethereum price to drop but Ethereum is still a good coin to hold it's technology features is one of the things that can rival Bitcoin anonymous features, I don't see ethereum right now dropping at $200 level it is indeed undervalued even majority of ico prefer ethereum.

[universal3ee]

Ethereum is definitely undervalue as last few months was on a bear trend and the value of ethereum drops to a low. Even if it goes back the value of last year peak i still think the value is still under, if we use bitcoin as a comparison ethereum have a big room to growth if it is more widely use like bitcoin and ethereum technology wins bitcoin by quite an amount just take the transaction it can do.

[Nalbo]

It's not just for the bear trend. The bear trend is moving the whole crypto market. But even on normal times Ethereum is way undervalued that it is worth of. Many popular tokens uses ethereum as a gas for transaction, EOS, TRON, Vechain, BNB, Omisego being some popular names.

[xjcjf]

With price fluctuations around the price, Ethereum indeed has the possibility of being underestimated. Its technology is very powerful and there will be broader development in the future.