Key Takeaways:
- ETH diverges from BTC, showing strength amid broader market weakness
- M2 money supply growth suggests ETH may be fundamentally undervalued
- On-chain signals possibly show that ETH is getting close to short-term overvaluation
A clear divergence has emerged between the top two assets in the market. According to CoinMarketCap, over the past 24 hours, Bitcoin (BTC) declined by over 1.5% to $116K. On the other hand, Ethereum (ETH) has shown slight positive movement, gaining around 1.8% trading around the levels of $3,700 at the time of reporting.
Ted Pillows, a well-known investor, entrepreneur, and Key Opinion Leader (KOL), stated on X that the price of ETH usually tracks the M2 supply. According to him, ETH should be worth more than $8K because the M2 supply has increased dramatically. The total amount of money in cash, checking, and savings accounts that people can use for investing and consumption is known as the M2 money supply. The Federal Reserve’s most recent report states that as of June 2025, the M2 supply had reached $22 trillion. Pillows believes ETH is one of the most undervalued investment opportunities available.
On July 2nd, 2025, @AltcoinTrader, a well-known cryptocurrency trader on X with 786K followers, tweeted that the increase in M2 supply would raise the price of all cryptocurrencies.
Moreover, Eric Trump also agreed with Pillow’s statement and responded with the following tweet:
What Does On-Chain Signals Suggest in the Short-Term
The MVRV ratio (Z-Score) helps to assess whether a cryptocurrency like Ethereum (ETH) is overvalued or undervalued. While the basic MVRV compares ETH’s market cap to the average price investors paid (realized value), the Z-Score goes a step further by adjusting for historical volatility, making it easier to identify extreme conditions like market tops or bottoms. While a Z-Score below 0 indicates undervaluation and possible accumulation possibilities, a Z-Score above 1 usually indicates that ETH is becoming overpriced and at risk of a drop.
As the price surged over $3,700 at the time of reporting, ETH’s MVRV Z-Score increased to 0.832 on the current chart. This suggests that although ETH hasn’t yet reached extreme levels, it is getting close to the overvaluation zone. Local tops have historically been identified by Z-scores greater than 1. The Z-score was extremely negative from February to May of this year, indicating undervaluation. ETH fell to its lowest point during that time before beginning its current upward trend. Overall, the trend is still optimistic, but if the Z-Score keeps rising, it signals an increase in the risk of short-term profit-taking.
ETH spot ETFs have outperformed BTC spot ETFs in inflows for six consecutive days ($2.4B vs. $830M total), despite the small sample size.
Conclusion
According to crypto expert and investor Ted Pillows, the rise in M2 supply might boost ETH above $8K even while on-chain signals indicate short-term caution. Even though on-chain indicators like the MVRV Z-Score point to a potential short-term caution, the broader macroeconomic environment, particularly the expanding M2 money supply, supports a long-term bullish case for ETH. Eric Trump retweeted Pillows’ belief that ETH is still tremendously inexpensive, which strengthened the optimistic sentiment surrounding ETH.
