The value of Ethereum compared to Bitcoin has dropped to its lowest level in four years, due to institutional preferences and technical challenges. The current ratio is 0.028, down from 0.027 in the past day, indicating that Ethereum is currently underperforming relative to Bitcoin. In the past month, Ethereum has declined by about 13.8% against Bitcoin. Since September 2022, the gradual decline in this ratio has exceeded 70%. However, a “moderately positive sentiment” can be seen for ETH in the medium to long term.
Dawson noted that this prediction has a “Delta skew of 25, which is a measure of bullish sentiment ranging between +8.6% and +9.4%.” “This means that calls are more expensive than puts, which could indicate positive sentiment for Q3 and beyond.”
According to data from Korean blockchain analytics company CryptoQuant, Ethereum’s performance has been lackluster and it has once again become a driver of inflation. The report points to the ballooning supply of the cryptocurrency. The supply indicator shows that since February 2024, Ethereum’s average growth rate has been 5.4%, increasing from 1.201 billion tokens in circulation to 1.2052 billion. The data is from Ycharts. CryptoQuant added, “Although there doesn’t seem to be a significant increase in supply, Ethereum should be deflating in the sense of gas after the merge upgrade.” It is worth noting that the current Ethereum supply has returned to the pre-upgrade level from the Ethereum transition to proof of stake in 2022.
In comparison to other altcoins outside of Bitcoin, Ethereum has also dropped in terms of fees and now ranks sixth in terms of market capitalization, behind USDC and Solana, according to data from Token Terminal. According to Coingecko, Bitcoin surged by 121.4% last year, while Ethereum only returned 46.29% in performance. “Ethereum has yet to have strong catalysts to support Bitcoin’s price,” said Pratik Kala, head of research at Apollo Crypto.
With the launch of spot ETFs, the performance gap has further widened as Bitcoin products attracted $35 billion in inflows compared to Ethereum’s $2.6 billion. Kala explained that while Bitcoin has “a host of big buyers (e.g. micro buyers),” there is no such demand for Ethereum, but he pointed out that ETF appetite for Ethereum is “subdued.”
The network participation of the Ethereum ecosystem also reflects these trends. Validator activity dropped by 1% last month, and the lack of the Spectre upgrade and previous updates allowed competitors like Solana to capture over 50% of DEX trading volume, although most of it “originated from PumpDotFun activities,” according to OKX’s data.
The Spectre upgrade is expected, according to Ethereum co-founder Vitalik Buterin, and Kala said that if implemented, these key changes could “reverse the downward trend of Ethereum.”
The internal tension between organizations involved in Ethereum’s technical development has also added to these market pressures. In early January, Aya Miyaguchi, Executive Director of the Ethereum Foundation (EF), faced criticism in response to perceived toxicity in a Japanese interview, where she said she was responsible for decision-making until such reforms could make the EF a “proper board.” In the same week, Etherealize, a project supported by the EF, was launched to attract Wall Street investors to the Ethereum ecosystem. Kala from Apollo Crypto pointed out that these developments have led the Ethereum community to engage in some “soul-searching” and added, “There seems to be a lack of clear leadership and direction, which leaves investors in a dilemma.”
So far, the atmosphere in the cryptocurrency market has a clear sky: Bitcoin’s simpler narrative and stronger institutional adoption pose a significant headwind for Ethereum’s broader ecosystem ambitions.