After more than 19 months since Ethereum’s Merge upgrade, it is evident that Ether (ETH) is not able to keep up with Bitcoin (BTC). The ETH/BTC price ratio hit a three-year low at 0.044, marking a significant decrease in market dominance for Ether since May of 2021. This trend has been disheartening for many Ethereum bulls who had high hopes that ETH would become a more attractive investment than Bitcoin following the Merge upgrade in September 2022.
Despite the bullish properties that Ether gained post-upgrade, including intrinsic yield and a negative inflation rate, the ETH/BTC ratio has dropped by 45% since the Merge. This decline is particularly noteworthy considering that the crypto market has been on the rise for the past 18 months. Typically, during bullish periods, altcoins tend to outperform BTC. However, this has not been the case for Ether, much to the dismay of investors and analysts alike.
Recent technical innovations have allowed developers to bring features previously unique to Ethereum to the Bitcoin network. This includes the introduction of Ordinals NFTs, Runes trading, and BitVM, a framework that enables the implementation of smart contracts and layer 2 networks on Bitcoin. As a result, Bitcoin has seen a surge in popularity for NFT trading, surpassing Ethereum in this aspect in just over a year.
In addition to technical hurdles, Ethereum is also facing regulatory obstacles. While Bitcoin spot ETF products have received approval, the chances of Ether spot ETF approval remain slim. The U.S. Securities and Exchange Commission is closely monitoring most altcoins, including Ether, leading to legal concerns for exchanges and companies involved with these assets. With Gary Gensler at the helm of the SEC, any progress in the digital asset space is likely to face stringent regulatory scrutiny.
The total crypto market dominance of Ether has dwindled to 15.1%, while Bitcoin’s market dominance stands at 54.5%. In contrast, Solana (SOL) has experienced a remarkable 665% increase in value over the past year, outperforming both Ether and Bitcoin in terms of price appreciation.
While Ethereum had promising prospects following the Merge upgrade, it has failed to maintain its position in comparison to Bitcoin. Technical advancements on the Bitcoin network, regulatory challenges facing Ethereum, and the rise of alternative competitors like Solana have all contributed to Ether’s decline. Investors and analysts alike must closely monitor these trends to navigate the volatile cryptocurrency market effectively.
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