Ethereum (ETH) continues to perform poorly against Bitcoin (BTC) as the second-largest digital asset by reported market cap hit new multi-year lows against the leading cryptocurrency.
Ethereum continues to underperform against Bitcoin
Today, Ethereum’s native ETH token fell further against BTC, recording a low of 0.0365 and erasing all its gains against Bitcoin since April 2021. This multi-year low against BTC is sure to ‘mitigate the expectations of ETH permabulls.
In December 2021, ETH reached a local high of 0.0865 against BTC. However, since then, the smart contract token has been on a continuous downward trajectory, down almost 58% against the leading digital asset.
Notably, the last monthly green candle displayed by ETH against BTC dates back to May 2024. It is highly likely that by the end of October, ETH will have displayed five consecutive monthly red candles against Bitcoin.
Year-to-date (YTD), ETH is down over 30% against BTC. Interestingly, over the past three months, the ETH/BTC trading pair has declined by over 22%, indicating that the major losses against BTC are more recent.
While various factors can be blamed for ETH’s lackluster price performance, one of the main reasons is increasing competition from rival smart contract blockchains such as Solana (SOL).
The chart below shows that SOL has been on an upward trajectory against ETH after a brief consolidation in June 2024. On a cumulative basis, SOL has seen almost 60% gains against ETH. At the time of writing, the SOL/ETH ratio is trading close to a new all-time high (ATH) at 0.069.
What’s holding ETH back?
Although Ethereum adoption continues to grow – driven by the recent Ethereum exchange-traded fund (ETF). approval by the United States Securities and Exchange Commission (SEC) – the effects are not fully reflected in the price action of the native ETH token.
A recent report found that more than 34 million ETH – almost 30% of its supply – is currently staked. Despite the drop in circulating supply due to staking, the price of ETH continues to see strong growth. poor performance compared to other digital assets.
Additionally, the extraordinary growth seen by Ethereum Layer 2 (L2) solutions such as Optimism, Arbitrum, and Base, has shifted focus away from the smart contract platform. In August, Justin Bons, founder of Cyber Capital said “Ethereum is dying while L2 dances on its grave.”
Despite growing pessimism towards price action, ETH whales remain unfazed as they continue to collect more tokens to benefit from potential future price appreciation. Recent analysis find that Ethereum whales now control approximately 43% of the total ETH supply.
Likewise, earlier this month it was noted that asset manager BlackRock sale its BTC holdings for ETH, suggesting the company’s bullish outlook on the token. At press time, ETH is trading at $2,532, up 0.2% in the last 24 hours.
Featured image from Unsplash.com, charts from TradingView.com
