Ethereum is currently considered as one of the most undervalued assets in the cryptocurrency market due to several key factors.

Approximately 27% of all Ethereum supply is staked in various protocols, reducing its liquidity and potentially driving up its price due to scarcity. Historical data reveals a correlation between low Ethereum inventory levels on exchanges and significant price movements. As of May 2024, Ethereum trades at approximately $3,000 with reserves at around 13,600,000 ETH, a level historically associated with higher future valuations.

The current reserve on exchanges is roughly half of what it was during the peak in November 2021, when Ethereum reached highs of $4,800 to $5,000 with 26,000,000 to 28,000,000 coins in reserves. The reduction in available supply, coupled with sustained or increasing demand, especially from the growth in DeFi applications using Ethereum as a base or collateral, supports a bullish outlook.

Ethereum benefits directly as the foundational platform for numerous projects, including Layer 2 solutions and cross-chain bridges, enhancing its utility and demand. The ongoing trend towards using Ethereum in DeFi, for lending, and as collateral, alongside the growth in staking and ReStaking protocols, supports its value appreciation. The potential for the adoption of spot Ethereum ETFs and increasing institutional interest could lead to higher liquidity and possibly more stable price trends.