What you describe is exactly how markets work in plenty of games with functional auction houses or other selling mechanisms. The reality is that if there are more suppliers then people that want to buy items prices should drop until some of the sellers leave the market because it is not worth their time. Making it so that the markets hides the value just means it'll take longer to get to the point you are already talking about. As long as there are more items then people that need them some will not sell and the price will get dropped. It might just take a few extra weeks. Ideas like materia as well as good consumable items are ways for items to leave the marketplace.

If they make adjustments in 2.0 so that items are generated and used in more similar rates this will help with the problem and undercutting will be a viable tactic for selling your items faster but not necessarily to get the maximum value out of them long term.