Ethereum Can’t Stop Losing Ground To Bitcoin

More than 19 months after Ethereum's landmark Merge upgrade, the data is clear: the network's native asset, Ethereum (ETH), is not keeping up with Bitcoin (BTC).

The ETH/BTC price ratio hit a three-year low on Thursday at 0.044, with Ether last seeing less market dominance versus Bitcoin appearing in May 2021.

Why does ETH keep dumping against BTC?

This trend has been disconcerting and confounding for Ethereum bulls, many of whom assumed that Ethereum would become a more attractive investment than Bitcoin after the September 2022 merger.

At that time, the upgrade introduced a proof-of-stake consensus mechanism, reducing the inflation rate of ETH by 90%.

Combined with the transaction fee burning mechanisms previously implemented in Ethereum, this means that ETH is now an investment with an intrinsic return and a negative inflation rate – bullish characteristics that its big brother BTC did not possess.

Despite these attributes, the price of ETH/BTC has fallen by 45% since the merger occurred. This is especially noteworthy given that cryptocurrencies have been in a general bull market over the past 18 months. During times like these, altcoins used to outperform Bitcoin.

Joe McCann, founder of Asymmetric Cryptocurrency Fund, chirp On Wednesday, “volatility” — the dream that ETH’s market value might one day exceed that of BTC — “has always been a dream turned nightmare.”

Bitcoin is “ultrasonic money” and Solana is the “global supercomputer,” McCann said. “Ethereum is not.”

Experts at CryptoQuant have argued that Ethereum has ceased to be “ultra money” since the Dencun upgrade took effect in March 2024. While it reduced transaction fees for users, it also turned Ethereum into an inflationary currency once again, hurting its investment thesis as a better store of value. Of Bitcoin.

At the same time, recent technical advances have allowed developers to bring applications to Bitcoin that were previously unique to Ethereum and other more programmable chains.

These include Ordinals NFTs, Trading Runes, and BitVM – a new framework for bringing smart contracts and low-trust Layer 2 networks to the Bitcoin ecosystem.

In just over one year since Ordinals gained traction, Bitcoin has already become a more popular chain for trading NFTs than Ethereum. Shows data from CryptoSlam.

Regulatory problems of Ethereum

Aside from technical concerns, Ethereum also faces significant headwinds on the regulatory front.

While bitcoin ETF products were approved in January, experts believe any imminent approval of bitcoin ETFs remains highly unlikely. Furthermore, most altcoins including Ethereum appear to be on the SEC's radar, raising legal issues against exchanges and other companies that interact with these assets.

“We believe that as long as Gary Gensler heads the SEC, any progress on digital assets will have to come through judicial channels,” said Mark Connors, head of research at 3IQ. interview With market monitoring.

Solana (SOL) has risen a whopping 665% in value over the past year, compared to ETH's 61% rise. Ethereum's overall dominance in the cryptocurrency market is now down to 15.1%, versus Bitcoin's 54.5%, according to CoinMarketCap.