As Bitcoin continues to hit historical highs, the price ratio of Ethereum (ETH) to Bitcoin (BTC) has fallen to its lowest point since March 2021.
According to TradingView data, in the past 24 hours, the ETH/BTC ratio on Binance exchange has declined by 1.54%, currently around 0.032 (3.2%). Since the beginning of 2024, this ratio has cumulatively plummeted over 40%.
Bitcoin is racing ahead, while Ethereum is still sleeping
The rapid decline of the ETH/BTC ratio is not unrelated to Bitcoin's 'king's return'. With Donald Trump, a pro-crypto Republican candidate, winning the election, Bitcoin not only surged ahead before the election but also skyrocketed to new heights after.
Earlier today (21), Bitcoin's price broke through $97,800 for the first time, with the market generally expecting that Bitcoin is likely to break the $100,000 mark by the end of the year.
BTCMarkets analyst Rachael Lucas stated that the U.S. approval of the Bitcoin spot ETF is one of the main driving forces behind Bitcoin's rally this year. She pointed out:
The launch of the Bitcoin spot ETF has attracted a large amount of institutional and retail funds, further solidifying Bitcoin's position as 'digital gold'.
However, compared to the glory of Bitcoin, Ethereum's performance appears lackluster. In the past week, Bitcoin's price has risen over 7%, while Ethereum has dropped 2.2%.
Ethereum is caught in a competitive gap: value positioning is in question
Steven Zheng, a research analyst at The Block, believes that Ethereum's current predicament stems from its awkward competitive positioning:
Ethereum has to compete with Bitcoin for the role of a store of value while also facing competitors like Solana in the smart contract space, which leaves investors feeling confused about its value positioning in the short term.
This year, Solana has rapidly risen as the preferred platform for the 'meme coin craze'. According to data from The Block, over 94% of the tokens newly listed on decentralized exchanges this Monday are based on Solana. Additionally, Solana has also surpassed Ethereum in key metrics such as protocol fees and trading volume.
Rachael Lucas added that since Ethereum completed its 'Merge' upgrade in 2022, its development momentum has significantly slowed, mainly affected by regulatory concerns in the U.S. about Ethereum possibly being classified as a security.
Does Ethereum still have a chance to 'turn the tables'?
Nevertheless, Steven Zheng believes that Ethereum's fundamentals remain solid, as it is still the most active smart contract platform, attracting many developers to continue building applications, and may regain momentum in the future due to technical upgrades or application trends.
Rachael Lucas stated that the weakness of Ethereum more reflects the centralization trend of Bitcoin in the market:
If Bitcoin's rally slows down, or if Ethereum attracts funds back due to technical upgrades or new use cases, the ETH/BTC ratio may still rebound.
Peter Chung, head of research at Presto Research, is optimistic about this. He believes that Ethereum's current weakness does not necessarily indicate that it will remain so in the future.
With the Trump administration's more crypto-friendly policies taking effect, it is expected that more Web3 projects will choose to launch on different chains.
He added: 'The blockchain industry is still in a very early stage of development, and it is too early to determine who the winner is. Considering Ethereum's community's years of performance and strong intellectual resources, it still remains a key player that cannot be ignored in the future.'
"As Bitcoin continues to write new historical highs, the 'ETH/BTC exchange rate' has fallen to a 3-year low" this article was first published on (Blockke).
