The ratio of Ether's market capitalization to Bitcoin's market capitalization hit a multi-year low on Wednesday and has declined overall since the merge. Will this trend continue?
Since the “merge” in September 2022, the ETH/BTC ratio has fallen by 45%.
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Posted May 15, 2024 at 2:41 PM ET.
The dream of Ethereum surpassing Bitcoin’s market cap, a development known as “flippening,” seems further away than ever. The value of Ethereum relative to Bitcoin (ETH/BTC) is at its lowest level in years, recently falling to 0.046, its lowest level since February 2021.
Additionally, since Ethereum made a major transition to proof-of-stake, also known as “proof-of-stake,” in September 2022.merge,ETH/BTC has fallen by 45%.
Ethereum mainnet activity has also been quiet. Transaction fees, as measured by gwei, are at multi-year lows as more activity moves to the Layer 2 network on Ethereum, indicating not much is happening on the network.
Read more: Why Ethereum gas prices have fallen to their lowest levels since 2020
experts give their opinions
Even Ryan Shawn Adams, co-host of the Bankless Podcast, who is known as a prominent supporter of Ethereum, is starting to have doubts.he recently wrote: post Titled “Will This Cycle Skip Ethereum?” We discuss why some investors believe ETH is likely to underperform in the current market cycle. This article outlines how Ethereum's transition to a Layer 2 solution and its “awkward adolescent phase” could lead to: Fragmentation Due to user frustration, it could fall behind Bitcoin and other cryptocurrencies during this bull market.
Joe McCann, founder, CEO and CIO of cryptocurrency fund Asymmetric, believes flippening was always a dream. He said that while Ethereum has received significant funding from VCs and received media attention, the bullish narrative is no longer as strong. “Ethereum as L1 is bound by the laws of physics, and given its architectural design, it is impossible to scale to meet the throughput and speed required for a 'supercomputer,'” McCann argues. He further argued that while Bitcoin remains “super healthy money,” Solana has become “the world's leading supercomputer.”
Read more: Scaling Ethereum with L2s damaged Tokenomics. Is it possible to fix it?
But some experts remain hopeful. Conor Loewen, an analyst at Canadian investment firm 3iQ, points to regulatory and legal developments that could drive ETH/BTC higher. He points out that Ethereum is dominant in issuance of fiat-backed stablecoins, with over $80 billion issued on its mainnet and scaling solutions. And positive legislation regarding stablecoins could have a significant impact on Ethereum's valuation. “We believe Ethereum is the perfect network to expand the role of the US dollar within the broader cryptocurrency ecosystem in the short term,” Loewen said.
Alex Krueger, founder of advisory firm Asgard, offers two scenarios for ETH. One is that regulatory clarity and potential ETF approval could lead to higher prices, and the other is that rejection could lead to a short-term decline before rebounding. Krueger believes the former scenario is more likely, suggesting the market could turn around.
Read more: Why SpotEther ETFs must wait until after the presidential election to be approved
BitBull Capital CEO Joe Di Pasquale also sees a bright future for Ethereum. He highlights the unique features that make Ethereum an attractive platform for decentralized applications, such as Ethereum's proof-of-stake mechanism and smart contract capabilities. Di Pasquale also noted the historical trend of Bitcoin initially rising faster after a market crash, but then Ethereum and other altcoins catching up and often surpassing it over the next few years.
Many Ethereum believers aspired to flippening, but recent trends seem to be fading that dream. However, there are mixed opinions among industry experts, suggesting that Ethereum's journey is far from over.
For now, Bitcoin remains the king of the crypto world. Ethereum still has a lot to prove if it wants to take the throne.
