- Next week will mark two years since Ethereum switched to a Proof-of-Stake network, an upgrade known as The Merge. Since then, Ethereum has underperformed Bitcoin by 44%.
1. ETH/BTC is at its lowest level since April 2021 at 0.0425.
2. Ethereum has continued to underperform Bitcoin even after the ETH spot ETF was approved in the US on July 23, and has fallen 18% since then.
3. Ethereum could fall further against Bitcoin as ETH is still above its undervaluation zone. It is estimated that ETH would need to fall to around 0.02 in terms of Bitcoin to enter the undervaluation zone, implying a 50% drop.
- Ethereum’s underperformance appears to be related to its weaker network activity dynamics compared to Bitcoin. One example is Ethereum’s network total transaction fees, which continue to fall compared to Bitcoin. This decline can mostly be attributed to lower transaction fees on Ethereum after the Dencun upgrade. In addition, the relative number of transactions has fallen from a record high of 27 in June 2021 to 11, one of the lowest levels since July 2020.
- Moreover, the supply dynamics are not supportive of ETH. ETH’s total supply has been steadily increasing since early April, shortly after the network’s most recent update, Dencun. The total supply is currently at 120.323 million ETH, the highest level since May 2023.
