Well, both certainly have notable downsides. I've been underestimated and overestimated.
Underestimation can lead to a lack of self-worth, feeling hopeless, not attempting things out of a fear of failure. Or alternatively someone who is underestimated might go out of their way to prove themselves, looking for approval from others. If they fail, this could be harder to accept. When someone tightly ties their sense of self to their accomplishments, making mistakes might led to them think that they are a bad human being.
When I was younger, I was often underestimated. I wanted more than anything to prove people wrong, because I secretly wanted their praise. Back then, I thought that if I could convince those who held me down that I was worthy of approval, then in turn that would mean that I could prove to myself that I wasn't all that bad.
Unfortunately, this backfired. When I put in my best efforts and was still met with unimpressed peers, it whittled away my confidence. Instead, a sense of self-hatred gradually grew. Most of my emotions numbed. I kept up with activities I never truly cared for, because I wanted to hear anything positive, it didn't matter what is was. Just anything to convince myself that I wasn't worthless like my school counsellor had said. Her words were like a slow poison, they seemed to seep deeper into my mind overtime, killing my spirit gradually.
If you're constantly underestimated, you can start to believe that it is true. Sometimes this can become a self-fulfilling prophecy, where you scold yourself for being bad at something but you're bad at it because you avoid it. You avoid it because you think what's the point when I'm clearly going to fail? Rinse and repeat. It's a destructive negative cycle to be stuck in.
Overestimation can lead to not getting the help and support you need. Someone who is overestimated may feel frustrated at themselves for struggling with something which others deem within their capability. With high expectations comes a lot of pressure and stress. An overestimated person may struggle to relax, constantly believing that they should be doing better. They might feel like a disappointment, failure, or an impostor.
My learning issues were put down to laziness, sometimes I was even mocked for this. I felt a sense of shame/embarrassment and came up with sneaky methods of trying to hide the fact that I was struggling. This became increasingly more difficult overtime as the learning gap widened. I could no longer hide my silly mistakes, and sometimes this meant the whole class was held back as well. This did not help my popularity.
So, I fudged it a lot of the time. In my science lessons, we sometimes had to do workings out at the end of class. No one could leave until we had all finished. I didn't want to use a calculator because I didn't want to be judged by others for turning to one for such simple questions. Sometimes I'd pick up a spare book (for instance, a workbook for someone who wasn't in class that day, or an older version of my workbook) and I'd hand that in with the rest of the books and hopefully leave before they realised. By doing so, I had more time at home to work through it, and I didn't have to be public enemy number one at school (which I would've been if I'd spent the time doing it in class, keeping everyone behind). Other times I just wrote in random numbers, and dealt with my teacher's annoyance the next lesson.
I was careful not to pull the book switch trick too many times, in case they caught on. Keeping consistent but changing it up enough to seem natural was the key to tricking teachers. 
I felt alone, and wondered if I was stupid. Every so often I saw myself as a hopeless failure. Similar to how I felt when I was underestimated, albeit for different reasons.
Personally, I'd say that being underestimated took the worst toll on my mental health. Whereas being overestimated affected my academic development the most. If a teacher overestimates my knowledge on a subject, and leaves me to my own devices I might fall behind if I'm not careful. Or if I'm mistaken for lazy when it's actually a learning issue, then I don't get the support that could've benefited me. However, the overestimation did lead to mental issues as well such as stress, self-doubt and negativity.
I think that anecdotally being underestimated has been the worst. But being overestimated isn't great either.
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26. Near the spectrum but not on it.