This year, despite Ethereum’s progress at the technical and regulatory levels, its performance has still not surpassed that of Bitcoin, which, as the originator of blockchain, has made significant progress in many aspects.
It’s been 19 months since Ethereum’s historic merge upgrade, but data shows that Ethereum’s native token, Ether (ETH), has failed to keep up with the growth of Bitcoin (BTC).
The ETH-to-BTC price ratio recently hit a three-year low of 0.044, marking another drop in Ether’s market dominance relative to Bitcoin since May 2021.
Why ETH keeps falling against BTC
ETH's continued decline relative to BTC has confused Ethereum supporters, who had expected ETH to become a more attractive investment option than Bitcoin after the merge upgrade in September 2022. That upgrade not only introduced the proof-of-stake consensus mechanism, but also significantly reduced ETH's inflation rate by 90%, and combined with Ethereum's previously implemented transaction fee burning mechanism, made ETH an investment asset with intrinsic returns and negative inflation, which Bitcoin does not have.
However, since the merger upgrade, the ETH-to-BTC ratio has fallen by 45%, a drop that is particularly noteworthy in the context of the current overall bull market, which typically sees altcoins outperform Bitcoin in such market conditions.
Joe McCann, founder of crypto fund Asymmetric, said on Twitter that the market had dreamed that ETH's market value would one day surpass BTC, but this dream has turned into a nightmare. He further pointed out that Bitcoin is an "ultrasonic currency", Solana is a "global supercomputer", and Ethereum is neither.
Analysts at CryptoQuant believe that Ethereum is no longer considered an “ultrasonic currency” since the Dencun upgrade came into effect in March 2024. Although the upgrade reduced transaction fees for users, it also made Ethereum an inflationary currency again, weakening its appeal as a store of value relative to Bitcoin.
At the same time, Bitcoin’s technological breakthroughs have enabled applications that were previously limited to more programmable blockchains such as Ethereum to be implemented on Bitcoin, including Ordinals NFTs, Runes trading, and BitVM, a new framework that introduces smart contracts and a minimally trusted second-layer network into the Bitcoin ecosystem.
Data from CryptoSlam shows that more than a year after Ordinals launched, Bitcoin has become a more popular NFT trading platform than Ethereum.
Ethereum faces regulatory dilemma
In addition to technical challenges, Ethereum also faces severe regulatory challenges.
Although Bitcoin's spot ETF product was approved in January, experts believe that the approval of an ETH spot ETF is still unlikely in the short term. In addition, most altcoins, including ETH, seem to have attracted the attention of the U.S. Securities and Exchange Commission (SEC), which may lead to legal risks for exchanges and other companies that interact with these assets.
Mark Connors, head of research at 3IQ, told MarketWatch that as long as Gary Gensler remains SEC chairman, any progress in the digital asset space will have to go through the judicial process. Meanwhile, Solana (SOL) has gained a staggering 665% over the past year, while ETH has only gained 61%.
Ethereum’s dominance of the entire cryptocurrency market has fallen to 15.1%, compared with Bitcoin’s 54.5%, according to CoinMarketCap.
Conclusion:
Despite Ethereum’s remarkable achievements in technological innovation and ecological development, it has still not surpassed Bitcoin in terms of market capitalization and market dominance. ETH’s continued decline against BTC, as well as the technical challenges and regulatory difficulties it faces, show that Ethereum still has a long way to go to take the lead in the cryptocurrency market.
Meanwhile, Bitcoin’s position as a market leader remains solid, with its technological advancements and growing adoption further solidifying its place in the minds of investors.
Finally, as the market develops and the regulatory environment changes, Ethereum needs to continue to adapt and innovate to maintain its competitiveness and continue to play an important role in the future cryptocurrency market. #以太坊 #比特币
