On-chain analysis week 39/2026: Ethereum is revaluing itself ahead of volatility.

Analyst Research Team

Group On-chain HCCVenture

Market Summary

In recent weeks, Ethereum has been entering a revaluation phase with simultaneous improvements in institutional capital flows, supply structure, and protocol upgrade progress . Notably, spot ETF market flows have shifted, recording a net inflow of $483 million in the 7 days ending September 24th, with BitMine lagging behind BlackRock's ETHA, contributing approximately $360 million.

Meanwhile, within the ERC network, Ethereum's supply structure continues to shift, with an increasing amount of ETH remaining outside of exchanges . Approximately 43.6 million ETH are in the active validator balance , equivalent to nearly 36% of the total supply, and the number of active validators has exceeded 893,000. Despite price adjustments, the total Ethereum supply remains around 122.08 million ETH , representing a net increase of approximately 87,000 ETH over 30 days due to issuance exceeding burning. However, the market is no longer focusing on ETH's deflationary supply but rather on the proportion of ETH locked in staking rather than stored on exchanges.

Another noteworthy point is that ETH reserves on centralized exchanges continue to be significantly lower than in earlier stages of the cycle , although the exact size depends on the wallet labeling methodology of each data provider. An updated data source on September 27th recorded approximately 10.23 million ETH on tracked exchanges, with Coinbase accounting for around 4.20 million ETH and Binance around 3.08 million ETH. This long-term trend coincides with the increase in staking and the amount of ETH held through ETFs, thereby altering the structure of the directly tradable supply.

In parallel with market developments, the focus of Ethereum protocol development is shifting strongly towards Layer-1 scalability . The next upgrade, Glamsterdam , is currently being tested on the devnet and is expected to launch on the mainnet in Q4 2026 , although the official deployment date has not yet been confirmed. The Ethereum Foundation states that Glamsterdam focuses on three main goals: increasing parallel processing capabilities, expanding network capacity, and controlling database bloat. One of the key changes is ePBS, along with block-level access list mechanisms and gas regulation, aiming to lay the groundwork for higher throughput and support for more blobs in the Layer-2 ecosystem.

ETH price has recovered approximately 12% from its September lows, ETFs continue to record positive net inflows, with over 43 million ETH in active validator balances, and the MVRV of large holder groups remains relatively low, just above 1. Meanwhile, net supply continues to increase slightly due to exceeding burn issuance, so the current story is not simply about "supply shortage," but rather a shift in where ETH is held and how institutional capital approaches the asset . Fundamentally, the Glamsterdam progress continues to reinforce Ethereum's long-term development trajectory towards L1 capacity building and L2 expansion support.

Analyzing on-chain metrics

ETH valuation is recovering but has not yet entered high-risk territory, according to the ETH asset risk matrix created using the AVIV Risk Oscillator to assess the degree of deviation of ETH price from the cost basis of active investors. At the end of September 2026, this index fluctuated around 1.0 to 1.1 , slightly higher than the Deep Value Zone = 1 , but still far below the High Risk = 2 .

• Data suggests that ETH has emerged from the deep discount it experienced early in the year, but the level of unrealized gains among active investors has not yet expanded sufficiently to push the market into high-risk valuation territory.

The indicator's history shows that strong bull cycles for ETH are often accompanied by an expansion of the AVIV Risk Oscillator from below 1 to above 1, then moving towards 2 or higher as the market enters a high valuation phase. A similar pattern reappeared in the 2025-2026 cycle, after ETH peaked at $4,000, the AVIV Risk Oscillator dropped sharply along with the price, especially during the early correction phases of 2026.

Therefore, considering the Risk Matrix specifically, the level at 1.0 currently acts as a crucial price equilibrium zone , and ETH is just above this zone, meaning the market has exited a deep discount state but has not yet created a sufficiently large gap from its operating cost. To move into a clearer price expansion cycle, we need to observe the oscillator remaining above 1 and continuing to form higher peaks, rather than just a short-term rally around the equilibrium level. Only when the indicator moves further away from the equilibrium zone and towards 2.0 or higher will the pricing structure begin to resemble periods of historically high unrealized returns.

The structure of ETH supply on exchanges is trending sharply downward and shifting more towards staking. In principle, when the amount of ETH held on exchanges decreases for an extended period, the supply that can be directly injected into the spot market also shrinks; conversely, an increase in exchange reserves usually reflects investors moving assets to trading platforms, thereby increasing the supply available to enter the market. Current data shows that the supply structure of Ethereum has changed significantly compared to previous cycles.

According to data from HCCVenture Research, the amount of ETH held on exchanges fell to approximately 14.6 million ETH in September 2026 , the lowest level since 2016. Compared to around 21.3 million ETH in July 2025 , the amount of ETH on exchanges decreased by about 6.7 million ETH , equivalent to more than 31% . Some data released in early September also recorded a level of around 14.88 million ETH, indicating that the downward trend is continuing rather than just a short-term fluctuation.

In previous cycles, periods of sharp price increases were often accompanied by a significant increase in the amount of ETH held on exchanges; in the current cycle, the supply on exchanges continues to shrink. The total Ethereum supply is currently around 122.1 million ETH, with 14.6 million ETH on exchanges representing approximately 12% of the total supply . The remainder is outside the centralized exchange system, in private wallets, smart contracts, the DeFi ecosystem, or staking mechanisms. InsideCrypto data also shows approximately 43.6 million ETH in active balance on validators , while the total Ethereum supply is around 122.08 million ETH.

When the amount of ETH available for trading on exchanges decreases, the market has a lower supply of liquidity to absorb new capital inflows. However, it's important to distinguish between low supply and increased demand . A decrease in Exchange Reserves itself doesn't create a mandatory bullish trend; it only alters supply conditions. For supply scarcity to translate into a sustainable bull cycle, new capital inflows from the spot market, ETFs, institutions, and the Ethereum ecosystem must still be large enough to absorb the supply being offered.

Aggregate Netflow shows the accumulation behavior of large capital flows moving within the on-chain market. A large positive value indicates increased pressure to move ETH into the market, while a large negative value reflects the amount of ETH leaving the trading area, often associated with accumulation or a reduction in the supply available for sale.

Throughout the data series from 2021 to September 2026, Ethereum's Aggregate Netflow has largely fluctuated around equilibrium, but has frequently experienced very large swings at market transition points. Most notably on the chart are several extremely large negative outflows in 2025-2026, with the lowest point observed in early 2026 reaching nearly -500,000 to -600,000 ETH on the chart axis. This represents the most extreme level in the data series and is significantly larger in magnitude than most previous outflows.

Compared to the aforementioned bottom of Aggregate Netflow, the current state has changed significantly, indicating that the Ethereum market is currently neither in an extreme accumulation nor an extreme distribution phase according to this indicator. More importantly, the return of Aggregate Netflow to equilibrium after a very large outflow cycle shows that the pressure to restructure the supply has significantly decreased.

This recovery is occurring in a context where Aggregate Netflow is not experiencing another extreme negative surge, a significant difference from periods where prices plummeted simultaneously with netflow fluctuations of hundreds of thousands of ETH. In other words, the pressure to reallocate supply has now decreased while the price remains above the most recent low , with this structure indicating a shift in the market from a state of high supply volatility to a more balanced state.

Ethereum's ownership structure is undergoing a notable shift between large investors and retail investors . Since 2024, the amount of ETH held by large investors has continuously expanded, while the amount of ETH held by retail investors has fallen to its lowest point in the entire data series.

• Large Investor Holdings holds approximately 18.7 million ETH (around $50 billion USD).

• Retail Holdings now has only about 9.1 million ETH (approximately $24.4 billion).

The long-term increase in Large Investor Holdings, from a low of around 10 million ETH in 2018-2019 , has seen their holdings rise to 18.7 million ETH currently , representing an approximate 87% increase from the bottom observed on the chart. Notably, this increase was not continuous but went through several correction phases, particularly in 2022-2024, before entering a strong expansion phase from late 2024 to 2026. It's important to note that Large Investor does not necessarily mean financial institutions . Large addresses can include whales, institutions, businesses, custodial wallets, some exchange-related wallets, or entities holding large amounts of ETH.

In contrast to Large Investors, Retail Holdings are forming a prolonged downward trend. During the 2019-2020 period, the amount of ETH held by Retail Holdings increased to approximately 18-19 million ETH , corresponding to the highest point in the data series. Subsequently, the trend reversed, and the amount of ETH held by this group continuously shrank through successive market cycles. To date, the amount of ETH held by Retail Holdings has decreased by about 51% from its peak , with the current 9.1 million ETH also being the lowest point shown on the entire chart , indicating a significant decline in the supply of ETH held by small investors.

In terms of supply structure, this suggests that Ethereum is undergoing a redistribution of ownership from smaller investors to larger entities . As Retail holdings of ETH decrease while Large Investors hold ETH increase, a portion of the supply is shifting to entities that tend to control larger amounts of the asset. However, this data reflects a shift in ownership , not directly confirming that the entire accumulated ETH represents new demand. If large holdings continue to remain high while Retail Holdings remain low, the current ownership structure will continue to consolidate; conversely, a renewed decline in Large Investor Holdings would indicate that the supply redistribution process has entered a new phase.

The Metcalfe Divergence Indicator is used to assess the relationship between Ethereum's market value and the actual activity level of the network, with Metcalfe being the value of a network that tends to increase with its size and the level of connectivity of participating members; therefore, divergence between price and address activity can provide a signal about the sustainability of the valuation process.

Compared to previous extreme lows, the current state is completely different in magnitude, with the NUPL at the end of the chart sitting above 0 , but only in a relatively low positive range, around 0.1-0.2 according to the chart's visual scale . Therefore, Ethereum has escaped a state of severe market capitalization loss, but has not yet reached the high NUPL levels seen in the strong bull phases of 2021 or 2024-2025. This is a crucial point when assessing the current cycle, as the market has moved out of an extremely low valuation state but has not yet reached an extreme state of unrealized profits .

Although address activity has recovered from its lowest point, it has not yet returned to the extreme expansion phase of previous cycles. While ETH price has recovered from its most recent bottom, the network's operational base has not yet shown a level of expansion corresponding to the strongest growth phases in history . Therefore, Metcalfe Divergence currently does not confirm that the price recovery has been accompanied by a corresponding network expansion cycle.

If NUPL continues to remain above 0, Realized Price remains below market price, and the number of active addresses continues to expand, the divergence between price and network value will continue to narrow. At that point, any price recovery will have further confirmation from network activity, strengthening Ethereum's growth structure rather than merely reflecting a short-term price rebound.

The unrealized profit ratio of whales (ETH whale unrealized profit ratio) is shifting from a declining to a positive trend again, but has not yet reached the extreme levels seen in previous bull cycles. By 2026, the profit share of the group holding over 100,000 ETH had significantly decreased compared to previous groups, but is now recovering from near zero, a notable shift as the indicator is no longer in deep negative territory like during the previous decline.

Most whale groups on the chart have returned to positive profit, indicating that the current value has surpassed a significant portion of the supply held by large addresses. However, if we take 2021 profits as a reference point, the current level is still much lower. At that point, the unrealized profit of the whale group is larger when expanded to the 4x level, as the current aggregate profit structure has recovered from its lows. Therefore, the data has not yet found a state of extreme profit similar to the late stages of previous bull cycles.

Currently, the structure is somewhere between these two states, with ETH having moved out of its lowest price range and whale unrealized profits returning to positive territory, but not yet reaching the extremely high profits of 2021 or the strong expansion zones of 2024-2025. This is consistent with the current ETH price, which remains significantly lower than its ATH.

This configuration suggests that the whale profit-taking base is improving but has not yet created extreme pressure. In the next phase, the key variable to watch is whether the unrealized funds continue to expand with the price or shift to a declining state simultaneously with the increase in ETH listed on exchanges.

The Taker/Market Orders CVD (Cumulative Volume Delta) is an indicator reflecting the cumulative difference between the volume of buy and sell market orders. The Ethereum chart shows a very noticeable change in the order flow structure since the end of 2024, with the CVD shifting from a prolonged negative state to a positive state and maintaining an upward trend , while the price of ETH has yet to return to its historical peak.

After Ethereum entered a sharp downturn in 2022, the red CVD zone expanded continuously and bottomed out at approximately -$500 to -$550 billion on the right-hand axis. This is the deepest negative level shown in the entire data series and reflects an extended period in which the volume of active sell orders significantly exceeded the volume of buy orders.

If we take the 2022 low as the benchmark, the CVD has improved significantly. From approximately -$500 to -$550 billion , the indicator has shifted to around +$60 billion , meaning it has not only recovered the entire decline but also crossed the zero equilibrium line. This gap is crucial for assessing the market structure. If we only observe the sign of CVD, the current state has turned positive because CVD > 0. However, if we observe the extent of expansion compared to history, active buying flow is still significantly lower than in 2021. This suggests that buying pressure has dominated in terms of accumulation, but has not yet reached extreme levels .

The Ethereum MVRV proxy in the chart is designed to track the valuation status and unrealized profits of the Institutional Whales group, corresponding to addresses holding approximately 10,000 ETH to 100,000 ETH .

Considering the entire cycle, the MVRV Proxy is currently in a recovery zone after undervaluation , rather than an extreme zone. Compared to the 2019 and 2022 lows, the current valuation has improved significantly: the MVRV of the 10,000-100,000 ETH group on HCCVenture data is at 1.155 , meaning the entire group still has positive unrealized profits.

Conversely, compared to the peaks of 2021 and 2024–2025, the current level is still quite far off, and is a crucial point for assessing the cyclical state, with unrealized profits having returned but not yet reaching a level that could create extreme profit-taking pressure from institutional whales .

Specifically, the group holding over 100,000 ETH has an MVRV of only around 1.023 , close to the equilibrium level of 1, indicating that the largest addresses still lack significant unrealized profits, while the 10,000-100,000 ETH group is at 1.155. This difference reflects the different cost structure among whale groups and shows that the entire behavior of "whales" cannot be attributed to a single homogeneous group.

The FEI Downside Alpha currently reflects a transitional structure for Ethereum, as the market has emerged from an extremely low-efficiency zone but has not yet returned to a highly efficient state. The FEI of around 84-85% is significantly higher than the historical low of 62-63%, while also noticeably lower than the 95-100% range seen during periods of high market efficiency.

The most important point is that FEI is approaching the 85% level from above , while ETH has recovered about 12% from its September lows. This combination suggests that the current price recovery is not yet confirmed by FEI returning to the high-efficiency zone. Based on the indicator's structure, the market is entering a zone where capital flows and short-term volatility are likely to play a larger role in price formation , rather than price simply reflecting a fully efficient market state.

Therefore, considering the 2021-2026 data series, the FEI is no longer at the extreme low of the cycle but has not yet reached the highly efficient state above 95% . Quantitatively, this is a crucial transitional zone at 85%, a threshold to watch, while the 62-63% range continues to be the extremely low reference point for the entire cycle. If the FEI continues to remain below 85%, the market structure will continue to lean towards low efficiency and high volatility; conversely, a sustained recovery above 95% would mark the return of the highly efficient state that appeared during the strongest phases of the cycle.

The CME Futures Net Position in USD currently shows that a negative net position still exists but has narrowed significantly compared to the historical extreme of the data series. From approximately -$1.4 billion at its lowest point in 2025, the position has now decreased to around -$428 million , equivalent to only about 31% of the peak negative size, with a significant structural shift and indicating that the level of negative positioning on the CME has decreased by approximately 69% compared to the extreme.

According to the latest data from September 22, 2026, Commercial held 3,281 Short positions compared to 166 Long positions , resulting in a net position of -3,115 contracts , equivalent to approximately -155,750 ETH or about -428 million USD . Meanwhile, Non-Commercial maintained a positive net position of +2,359 contracts , indicating a clear divergence in the structure among trader groups on the CME.

Considering the ETH price of around $2687 on September 27, 2026 , which is approximately 12.1% higher than the low of $2397 on September 15 , the current data reflects a state where the price has recovered while the level of negative positioning on the CME has significantly decreased compared to the 2025 extreme .

In terms of cycles, the indicator is no longer in the extreme negative position state of 2025. The focus of COT has now shifted from the issue of “excessively large net short positions” to determining whether the negative position will continue to narrow or begin to expand again. With the current data, the main trend of the indicator is a significant decrease in the level of negative positioning from its historical low, while the price of ETH has remained above the $2600 region.

Our assessment and conclusions

Ethereum currently doesn't show the characteristics of an asset at a cyclical valuation peak . With the MVRV index still just above 1, the unrealized profits of large holder groups are limited, and the FEI at around 84-85% remains low and stable, thus identifying it as a high-efficiency market area. Simultaneously, ETH price has only recovered about 12% from its September low. This combination suggests that the current revaluation process is still relatively early compared to periods when on-chain indicators collectively entered extreme zones.

In terms of valuation, the next key milestone should not be determined solely by a target price , but rather by a consensus between price and fundamental indicators. A high-quality price increase will need to be accompanied by continued improvement in ETF inflows, an increase in MVRV (Mean Value Value) but not yet reaching excessively high levels, continued absorption of ETH liquidity on exchanges, and derivative positions not returning to extreme levels. Conversely, if the price rises rapidly while MVRV expands strongly and the unrealized profits of large holding groups increase faster than the rate of new capital absorption, valuation will enter a different state than it is currently, and distribution risk will need to be reassessed.

Therefore, the current valuation range can be seen as a re-accumulation and revaluation phase rather than a high valuation phase of the cycle . The basis of this assessment doesn't come solely from price movements, but from the fact that ETH is recovering while MVRV, FEI, and COT haven't yet reached historically extreme levels. If new capital continues to be absorbed without creating an excessively rapid increase in unrealized gains, the room for further market valuation expansion will be strengthened by the data.

Ethereum is currently in a recovery and revaluation phase , with on-chain valuation remaining relatively low compared to historical peaks. The basis for assessing the next phase will lie in the consensus between institutional capital flows, MVRV, supply structure, exchange liquidity, and derivative positions . As long as the price continues to be supported by real capital flows and MVRV increases at a controlled pace, the valuation expansion process will have a clearer data basis; conversely, a rapid increase in MVRV and unrealized gains will signal that Ethereum is moving from the revaluation phase to the higher valuation phase of the cycle.

Disclaimer

This report was prepared by HCCVenture Research with the aim of providing information, research, and market analysis. The entire content of the report is based on publicly available data, on-chain data, market data, venture capital (Venture Capital) data, macroeconomic data, and HCCVenture's internal research methodologies at the time of publication. Data sources are compiled from numerous reputable research platforms and organizations, including but not limited to Glassnode, CoinGecko, TradingView, Dune Analytics, CoinGlass, CryptoRank, RootData, PitchBook, DefiLlama, CryptoQuant, Messari, Token Terminal, Artemis, CoinMarketCap , public blockchain data, reports from financial institutions, investment funds, blockchain companies, and other publicly available information sources. HCCVenture strives to select reliable data sources and applies a verification and cross-checking process throughout its research. However, HCCVenture does not guarantee the completeness, accuracy, timeliness, or error-free nature of all data due to differences in statistical methods, data collection scope, update times, or adjustments from data providers.

All opinions, assessments, valuation models, cyclical analysis, on-chain data, capital flow analysis, Venture Capital activity, ETFs, Digital Asset Treasury Companies (DATs), technical indicators, macroeconomic indicators, and scenarios presented in this report reflect only the research views of HCCVenture Research at the time of publication, based on available assumptions and data. These contents are not investment advice, financial advice, legal advice, accounting advice, tax advice, brokerage advice, portfolio management advice, or recommendations to buy, sell, or hold any digital asset, security, financial product, investment fund, blockchain protocol, or business. The digital asset and blockchain markets are highly volatile and are influenced by global liquidity, monetary policy, regulatory regulations, macroeconomic conditions, and many other unpredictable factors. Therefore, the trends, patterns, correlations, or historical cycles mentioned in this report are not guaranteed to repeat in the future and should not be considered reliable predictions of market developments. Readers should conduct their own independent research ( DYOR – Do Your Own Research ) and consult with qualified financial, legal, tax, or investment professionals before making any decisions. Any investment decisions or actions arising from the use of information in this report are the sole responsibility of the reader.

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