Ethereum's value against Bitcoin has plummeted to its lowest level in over four years, reaching 0.028 as of today, according to data from RatioGang. This decline, reaching as low as 0.027 yesterday, highlights Ethereum's underperformance compared to Bitcoin.
Over the past month, Ethereum has decreased by approximately 13.8% against Bitcoin. Since September 2022, the ratio has fallen by more than 70%. Despite this, Sean Dawson, head of research at Derive.xyz, suggests a "mildly positive sentiment" for ETH in the medium to long term. This optimism is based on 25 delta skews, a measure of bullish sentiment, hovering at +8.6% and +9.4%, indicating calls are more expensive than puts, potentially signaling positive sentiment into Q3 and beyond.
On-chain indicators, such as market price over realized price, also point to a declining trend, according to CryptoQuant. Analysts from CryptoQuant attribute this to Ethereum's return to inflation, with supply increasing at an average rate of 5.4% since February 2024. This growth, from 120.1 million tokens in circulation to 120.52 million, is significant as Ethereum was expected to be deflationary after the Merge upgrade.
Ethereum has also experienced a decline in fee revenue, now ranking sixth after Circle's USDC and Solana, according to Token Terminal. This underperformance contrasts with Bitcoin's 121.4% surge last year, while Ethereum returned just 46.29%.
The performance gap widened further with the launch of spot ETFs, as Bitcoin products attracted $35 billion in inflows compared to Ethereum's modest $2.6 billion. Pratik Kala, head of research at Apollo Crypto, attributes this to the lack of strong catalysts for Ethereum's price compared to Bitcoin, particularly the absence of large institutional buyers like MicroStrategy.
Network participation across the Ethereum ecosystem also shows concerning trends. Active validators dropped 1% last month, and delays on the Pectra upgrade, along with underwhelming previous updates, have allowed competitors like Solana to capture over 50% of DEX trading volume.
The Pectra upgrade is expected to arrive by March, according to Ethereum co-founder Vitalik Buterin. If implemented, these changes could potentially reverse Ethereum's downtrend. Internal tensions within the Ethereum community, including criticism of Ethereum Foundation executive director Aya Miyaguchi and the perceived lack of clear leadership, have further contributed to market pressures.
For now, Bitcoin's simpler narrative and stronger institutional adoption have created a headwind for Ethereum's broader ecosystem ambitions.