Recent price action shows that Ethereum has fallen significantly behind as Bitcoin has gained the largest price advantage over the altcoin ecosystem in recent history.
Bitcoin is about $1 trillion higher than Ethereum, which has dropped to its lowest level since the beginning of 2021.
Bitcoin was trading at around $68,000 on Monday, with a market value of $1.34 trillion, according to Binance data.
The leading altcoin, on the other hand, had a market value of about $300 billion.
This puts the ETH/BTC ratio at a low of just 0.037, the last time observed in April 2021, following Ethereum’s meteoric growth over the preceding 12 months. Ethereum exhibited a similar price pattern to other major altcoins during the previous bull market: it increased in value when Bitcoin did.
The slower growth in institutional demand for Ethereum relative to Bitcoin is a major factor contributing to this ongoing performance disparity. The July 2024 launch of spot Ethereum ETFs elicited a mixed response and did not substantially alter the summer trend.
According to the Kaiko research report, open interest in Bitcoin CME futures, which serve as a proxy for institutional interest, recently reached successive all-time highs. In contrast, open interest in Ether futures on the CME is relatively modest at 7,300 contracts ($970 million). This implies that the market is less developed and that institutional interest in Ethereum futures is much lower.
The leading smart contract platform has lost over half of its value relative to Bitcoin following Ethereum’s much-anticipated Merge update in September 2022, even as the entire cryptocurrency market subsequently increased in value in US dollars.
Bitcoin has been at the center of some of the most bullish catalysts in cryptocurrency over the past two years. As several US banks failed in March 2023, investors flocked to Bitcoin due to its reputation as “digital gold.” Later, as anticipation grew for the approval of Bitcoin spot ETFs, the price of Bitcoin surged for several months. This trend continued in 2024 following the ETF’s enormous success.
Since going live in July, Ethereum spot ETFs have experienced net negative flows due to losses from the Grayscale Ethereum Trust, in contrast to Bitcoin ETFs, which have absorbed nearly $20 billion in net flows since their debut.
Despite these poor results, online Ethereum advocates remain steadfast. Anthony Sassal, an Ethereum instructor, contended that Ethereum’s Layer 2 solutions are dispelling rumors that the network is costly and slow, asserting that current supporters are not merely “bandwagoners.”
Traders prefer digital assets with larger betas, partly due to ETH’s poor performance after the merger and increasing competition from “ETH killers” like Solana. Investors can also gain exposure to Ethereum through a range of Layer 2 solutions built on its network, which have performed significantly better than the leading altcoin.
Even though Bitcoin is the most popular cryptocurrency, ETH could benefit from the next US elections by reducing regulatory risks. Furthermore, the Ethereum ecosystem is continually evolving, which could impact its value proposition and adoption in the future.