What is the true value of Ethereum? Eight models calculate it to be $4800, but Wall Street may not think so.

Written by: White55, Mars Finance

In the current secondary market, where emotions are extremely panicked, the valuation of Ethereum has become the focal point of debate.

According to research by CryptoQuant CEO Ki Young Ju, 9 out of 12 commonly used valuation models indicate that ETH is undervalued, with a comprehensive fair value of $4836, which is over 58% higher than the current price. However, amidst the bullish sentiment, the most reliable earnings yield valuation model suggests that ETH is overvalued by more than 57%, with a reasonable price being around $1296. This significant divergence reveals the challenges of valuing blockchain networks.

Majority Opinion: Consistent Bullishness of Nine Valuation Models

Among the various Ethereum valuation methods, the Metcalfe's Law model provides the most optimistic prediction, showing that the fair value of ETH could be as high as $9,534, implying it is undervalued by more than 200%.

Metcalfe's Law posits that the value of a network is proportional to the square of the number of users, a theory that has been empirically validated by academic researchers for Bitcoin and Ethereum.

The on-chain asset valuation model views Ethereum as a massive asset settlement layer, assigning a fair value of $4,918 to ETH. This approach considers all assets on Ethereum, including stablecoins, ERC-20 tokens, NFTs, real-world tokenized assets, and bridging assets. Its core assumption is that to ensure network security, Ethereum's market capitalization should match the value of all assets settled on it.

The Layer-2 framework valuation model focuses on the development of the Ethereum ecosystem. This model predicts an ETH price of $4,633 by calculating the total locked value in the Ethereum Layer-2 scaling network ecosystem, indicating that ETH is undervalued by about 52%. This data reflects the explosive growth of L2 solutions - as of November 2025, the daily transaction volume of L2 has surpassed 13.8 million, with an annual growth rate of up to 253%.

Dissenters: A Warning from the Yield Yield Model

According to the return on investment valuation model, ETH is overvalued. Source: ETHval

While most models present a bullish outlook, the earnings yield valuation model indicates that ETH is overvalued by more than 57%, suggesting that ETH's fair price should be around $1296.

This model is favored by traditional financial analysts who evaluate cryptocurrencies as an alternative asset class, with its core being the valuation of Ethereum as a yield-bearing bond.

The calculation method is to divide Ethereum's annual revenue by the staking yield to derive the total market value. The overestimation signals behind the yield model reflect fundamental issues with Ethereum's network income. With transaction fees dropping to a historical low and competing networks capturing some market share, Ethereum's fundamental income-generating ability is indeed under challenge.

The Controversy of Model Reliability: Why Are Return on Investment Models Considered the Most Reliable?

In the field of valuation models, reliability is divided into three levels.

In Hashed's evaluation system, the yield yield rate model is the only valuation method marked as “high reliability,” while most other methods are classified as medium or low reliability.

The basis for this reliability grading lies in the fact that the yield rate model is the most familiar valuation method in the traditional financial sector and has been widely applied in the assessment of various income-generating assets. An institutional analyst explained: “When you introduce Ethereum valuation to the traditional financial world, the model they find easiest to understand is this one—it treats ETH as an asset that generates cash flow rather than merely relying on speculative value.” However, this “reliability” can also become a double-edged sword.

The blockchain analysis platform CryptoQuant pointed out: “These models are built by trusted experts from academia and traditional finance,” with reliability ratings of at least two levels for 8 out of the 12 models. However, this does not mean they can perfectly capture the full value of emerging asset classes like Ethereum.

The Gap Between Theory and Reality: Traditional Valuation Models Encounter Challenges from Blockchain

The huge difference between the yield yield model and Metcalfe's Law highlights the fundamental divergence in different valuation philosophies. Traditional valuation methods seem inadequate when dealing with decentralized networks.

Taking the price-to-sales ratio valuation model as an example, this model compares Ethereum's transaction fee revenue to a company's revenue, using a valuation level of 25 times that of growth technology stocks for calculation. The result yields a “fair price” of $1285, indicating a potential downside of 57.5% from the current price.

The problem is that this model completely ignores the external value brought by network effects.

Similarly, the discounted cash flow method also has significant drawbacks.

Hashed attempts to view Ethereum's staking rewards as income, calculating the current value through a discounted cash flow method, but even using its formula, the results indicate that the current price of ETH is overvalued.

The limitation of these traditional models is that they attempt to fit the decentralized network of Ethereum into the valuation framework of traditional corporate finance, while ignoring the unique metabolic laws and value creation methods of blockchain networks.

Market Actual Performance: The Truth Revealed by Capital Flow

The comprehensive fair value of ETH over the past year. Data source: ETHval

Although there are differences in valuation models, the actual flow of market funds provides a kind of reality check.

Savvy investors seem to be voting with real money.

Data shows that in the past three months, there have been 21 new addresses holding over 10,000 ETH, while the ETH reserves of exchanges have decreased by 8%. This phenomenon of “withdrawal accumulation” is reminiscent of the early behavior of Bitcoin whales hoarding before the spot ETF approval, suggesting that large funds are quietly accumulating positions.

On the institutional side, some hedge funds are building a “long ETH short Altcoin” hedging strategy, viewing Ethereum as a “defensive asset” in the crypto world. This strategy indicates that, in the eyes of institutions, Ethereum has fundamentally differentiated itself from other altcoins, with its risk-return characteristics being more akin to “blue-chip” crypto assets like Bitcoin.

The ETF inflow data also supports this view. Since mid-July 2025, the spot Ethereum ETF has attracted more than 260,000 ETH daily, equivalent to over $1 billion flowing directly into the market. This continuous buying not only provides price support but also indicates that Ethereum is entering the asset allocation perspective of traditional finance.

Future Outlook: Investment Logic Amid Valuation Discrepancies

For investors, the current divergence in valuation models presents both challenges and opportunities. The key is to understand the underlying assumptions and applicable environments of the different models.

The validity of Metcalfe's law and other bullish models is based on the premise of continuously strengthening network effects.

Currently, the number of daily active addresses on Ethereum is about 970,000. If this number can increase to 1.3 million (close to 90% of the historical high), according to Metcalfe's Law, the price of ETH could reach $8,058. The key driving forces behind achieving this goal may come from the popularity of L2, the emergence of new application scenarios, and increased institutional adoption.

The bearish yield model reminds investors to pay attention to risk factors: if network income continues to decline and staking yield is difficult to maintain, then the current price is indeed overvalued. In this case, investors need to closely monitor Ethereum transaction fee trends, competitor siphoning effects, and the impact of network upgrades on the economic model.