Ethereum’s value against Bitcoin has plummeted to its lowest level in over four years amid shifting institutional preferences and technical challenges.
The ratio now stands at 0.028,per data from RatioGang, having dropped as low as 0.027 in the past day—indicating just how far Ethereum is currently underperforming relative to Bitcoin.
Over the past month, Ethereum has declined by approximately 13.8% against Bitcoin. The ratio’s gradual decline has tumbled more than 70% since September 2022.
Despite this, a “mildly positive sentiment” for ETH in the medium to long term can be seen, Sean Dawson, head of research at Derive.xyz, told Decrypt.
This forecast comes “with 25 delta skews, a measure of bullish sentiment, hovering at +8.6% and +9.4% respectively,” Dawson noted. “This means calls are more expensive than puts, possibly indicating positive sentiment into Q3 and beyond.”
Broader on-chain indicators on market price over realized price also point to a declining trend, according to data from South Korean blockchain analytics firm CryptoQuant.
“Ethereum has continued to underperform Bitcoin […] partially driven by Ethereum becoming inflationary again,” analysts from CryptoQuant said in a late January report referring to the crypto’s ballooning supply.
The supply metrics show that Ethereum has grown at an average rate of 5.4% since February 2024, from 120.1 million tokens in circulation to 120.52 million, according to data from YCharts.
“Although it may not seem like a large supply increase, it is significant as Ethereum was supposed to be deflationary after the Merge upgrade,” CryptoQuant added.
Notably, the current supply of Ethereum has gone back to the same level as before that upgrade, which began after Ethereum transitioned to proof-of-stake in 2022.
Falling behind
Compared to other chains aside from Bitcoin, Ethereum has also fallen in fee revenue, now ranking sixth after Circle’s USDC and Solana, according to data from Token Terminal.
While Bitcoin surged 121.4% last year, Ethereum significantly underperformed, returning just 46.29%, according to CoinGecko data.
“Ethereum has not caught a bid due to a lack of strong catalysts to support price relative to Bitcoin,” Pratik Kala, head of research at Apollo Crypto, told Decrypt.
The performance gap widened further with the launch of spot ETFs, as Bitcoin products attracted $35 billion in inflows compared to Ethereum’s modest $2.6 billion.
While Bitcoin has “a range of large buyers [such as] MicroStrategy,” no such demand exists for Ethereum, Kala explained, noting that ETF appetite for Ethereum had been “lackluster.”
Network participation across the Ethereum ecosystem also shows concerning trends.
Active validators dropped 1% last month, while delays on the Pectra upgrade and underwhelming previous updates have allowed competitors like Solana to capture over 50% of DEX trading volume, though most of this “stems from pumpdotfun activity,” according to data from an OKX report.
The Pectra upgrade is expected to arrive by March, according to Ethereum co-founder Vitalik Buterin. If implemented, these key changes could “lead to a reversal” of Ethereum’s downtrend, Kala said.
Pectra, expected in March, will increase the blob target from 3 to 6, doubling the capacity of L2s.
IMO we should make the blob target also staker-voted, so that it can increase in respose to technology improvements without waiting for hard forks.
— vitalik.eth (@VitalikButerin) February 4, 2025
How the game works
Internal tensions among organizations involved with Ethereum’s technical development have also compounded these market pressures.
Earlier in January, Ethereum Foundation (EF) executive director Aya Miyaguchi faced criticism following a mistranslated Japanese interview, prompting Buterin to respond to the perceived toxicity, saying he’s responsible for decisions until such time reforms could give the EF a “proper board.”
In the same week, Etherealize, a project supported by the EF, was launched in a bid to attract Wall Street investors to the Ethereum ecosystem.
These developments have led the Ethereum community to go through some “soul-searching,” Kala of Apollo Crypto noted, adding that at present, “there seems to be a lack of clear leadership and direction which is keeping investors at bay.”
At least for now, the crypto market’s atmosphere has clear skies: Bitcoin’s simpler narrative and stronger institutional adoption have created a formidable headwind for Ethereum’s broader ecosystem ambitions.
