Why Ethereum Is Lagging Bitcoin—Analysts Cite Inflationary Problems, Dencun Upgrade Blowback, And Solana’s Meme Coins

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ethereum (Crypto: EthThe second largest encrypted currency, according to the market value, has drew a completely opposite path when compared to his older brothers, Bitcoin (Crypto: BTC), During the past year.

Consider this. Bitcoin jumped 32 % a year, reaching the highest level ever at $ 109,000. Its share in the total cryptocurrency market has expanded from 52 % to 60 %.

Ethereum, on the other hand, has contracted 39 % at the same time, reducing its market share from 16 % to 8 %.

The wide gap has sparked discussions on the role of Ethereum in the hierarchy of the cryptocurrency and its future periodic periodic that Benzinga spoke to a few analysts to understand the factors that contribute to the continuous transformation of the ecological system.

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Jeffrey is, Head of Investment Research in the Director of Digital Assets Hashkey CapitalIt is believed that the error lies in the economic model of Ethereum.

“The activation of the EIP-1559 allows the burning of more ether in order to shrink when the ether activity is high on the ETHEREUM; however, in order to increase applications support on the chain, Ethereum must expand.”

The Ethereum London Hard FORK, is called its name Eip-1559The mechanism of burning a network symbol was provided. Under this mechanism, the basic fees are removed, that is, the minimum fees for each treatment, to add deviation pressure to the ETH and increase its value.

What is the exact problem?

He emphasized that climbing layer 2 Blockchains and Dencun upgrade,, Which reduced the fees on the L2S with orders by size, converting the activity on the chain away from the ethreum series, which leads to inflation.

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According to ultrasound funds, the ETH rate began to slow down in May 2024, and since early February, the currency width has increased.

Source: Ultrasound Money

Trever KoverkoAnd web3 investor and co -founder of Sabine, Echo these notes.

“Ethereum is struggling to create a story on how to accumulate L2 and not extractive for the main series,” he added.

However, L2S was not the only competition that Ethereum faced.