Ethereum has significantly underperformed Bitcoin throughout the year, with the ETH/BTC ratio dropping 58% from its 2021 peak of 0.086 to its recent low of 0.0365. Last week, the pair showed high volatility, dropping 8% before rebounding sharply by 3% today to 0.0374.
There are several factors contributing to Ethereum's relative weakness. Bitcoin has reaffirmed its dominance as a leading digital asset and is attracting increasing interest from institutional investors. Unlike Bitcoin, which has a fixed supply, Ethereum issuance is less predictable, which can affect investor confidence. The growth of layer 2 solutions is impacting Ethereum's revenue and perceived value, but competition from alternative layer 1 blockchains like Solana is threatening Ethereum's market position. Furthermore, while the success of Bitcoin ETFs has shifted the focus of institutional investors to BTC, inflows to Ethereum ETFs have been subdued in comparison.
Despite the downward trend, some analysts believe that the ETH/BTC ratio may recover. Ethereum's continued development and expansion solutions are likely to renew investor interest. Some experts predict a possible recovery in 2025, in line with the next expected crypto bull market.
Liam Akiva Wright
Liam Wright, also known as “Akiba,” is a reporter, podcast producer, and editor-in-chief at CryptoSlate. He believes decentralized technology has the potential to bring about far-reaching positive change.
