As an analyst with a background in cryptocurrency and finance, I’ve been closely monitoring the trends in the Ethereum (ETH) and Bitcoin (BTC) markets. The data presented in this article is concerning, as it highlights the significant underperformance of ETH against BTC since the Merge upgrade in September 2022.
Nearly 20 months have passed since Ethereum underwent its groundbreaking Merge upgrade. The numbers speak for themselves: unlike Bitcoin, Ethereum’s native token, Ether (ETH), has yet to match its pace of growth.
As a researcher studying the cryptocurrency market, I’ve observed that the ETH/BTC price ratio reached a new three-year low on Thursday, hitting 0.044. This indicates that Bitcoin has been dominating the market more than Ether since May 2021, with Ether having less value in terms of Bitcoin at that time.
Why Does ETH Keep Dumping Against BTC?
For Ethereum investors who were optimistic about the platform, the recent trend has been disconcerting and perplexing. Many had anticipated that ETH would prove to be a more enticing investment opportunity than Bitcoin after the September 2022 Merge.
During that period, the update implemented a proof-of-stake consensus system and decreased Ethereum’s inflation rate by 90%.
As a researcher studying the cryptocurrency market, I’ve observed an interesting development in Ethereum (ETH). Previously, Ethereum implemented transaction fee-burning mechanics. This feature, when combined with it, made ETH unique in several ways. Firstly, ETH became an investment that generates intrinsic yield through transaction fees. Secondly, Ethereum now has a negative inflation rate due to the burned fees. In contrast, Bitcoin (BTC), Ethereum’s older brother, does not possess these bullish properties.
Despite possessing these desirable traits, the ETH–BTC pair has experienced a significant decline of 45% since the Merge occurred. This is an intriguing development considering crypto markets have been in an extended bull phase for approximately 18 months. Typically, during such periods, altcoins are expected to surpass Bitcoin’s performance.
I, Joe McCann, the founder of Asymmetric crypto fund, expressed on Wednesday that the once cherished idea of Ethereum (ETH) surpassing Bitcoin (BTC) in market capitalization, a concept referred to as “the flippening,” has evolved from an inspiring dream into a distressing nightmare.
“According to McCann, Bitcoin functions like ‘digital gold’ or ‘ultra-sound money,’ while Solana serves as the ‘global supercomputer.’ Ethereum, on the other hand, doesn’t fit into either category.”
As a crypto investor, I’ve closely followed the analysis from CryptoQuant’s team of experts. They’ve made a compelling point about Ether no longer qualifying as “ultrasound money” following the Denver upgrade in March 2024. This upgrade aimed to reduce transaction fees for users but unfortunately brought back inflation to Ether. Consequently, its value proposition as a superior store of value compared to Bitcoin has been diminished due to this inflationary nature.
Modern technological advancements have enabled programmers to port apps exclusive to Ethereum and other flexible blockchains onto Bitcoin.
In this realm, you’ll find Ordinal NFTs, Runes trading, and BitVM – innovations that introduce smart contracts and dependable layer 2 networks based on Bitcoin’s foundational principles.
Approximately one year after making waves in the market, Bitcoin has surpassed Ethereum in popularity for non-fungible token (NFT) trading based on recent data from CryptoSlam.
Ethereum’s Regulatory Woes
Aside from technical concerns, Ethereum also faces major headwinds on the regulatory front.
Experts believe it’s very uncertain that the SEC will approve an Ether spot ETF anytime soon, despite Bitcoin spot ETFs receiving approval in January. Additionally, many altcoins including Ether are under scrutiny by the U.S. Securities and Exchange Commission, increasing the risk of legal issues for exchanges and other entities dealing with these assets.
As an analyst, I believe that under Gary Gensler’s leadership at the SEC, any progress in the digital asset sector is likely to be achieved through legal channels.
Over the past year, Solana’s price has soared by an impressive 665 percent, significantly outpacing Ethereum’s 61 percent growth. As of now, Ethereum holds a market dominance of 15.1 percent in the crypto sector, while Bitcoin maintains a commanding 54.5 percent share, according to CoinMarketCap data.
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2024-05-16 22:13